Motives to Share: Evidence from a Risk Sharing: Experiment in Kenya

Abstract

Informal transfers are widely used by poor households in developing countries and may occur for a variety of reasons including informal insurance, social preferences and social pressure. I examine these motives using a laboratory experiment with residents from the informal settlements of Nairobi. In the experiment, participants face risk and can make transfers to each other. In the experiment, sharing of income may occur due to reasons of informal insurance as well as reasons of social preferences and social pressure that have previously been examined. I find that imperfect informal insurance fits 73% of transfers. Warm glow altruism, measured as behavior in an anonymous dictator game, best fits the pattern of the transfers that cannot be explain by informal insurance.

  • Country
    Kenya
  • Behavior
    Psychological Well Being
  • Sector
    Work and Productivity
  • Authors
    Prachi Jain
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