Investment Behaviour, Risk Sharing and Social Distance

D'Exelle, Ben ORCID: and Verschoor, Arjan (2015) Investment Behaviour, Risk Sharing and Social Distance. The Economic Journal, 125 (584). 777–802. ISSN 0013-0133

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Using a lab-in-the-field experiment in Uganda we study how risk sharing influences investment behaviour. Depending on the treatment, an investor may decide to share profits with a paired person, and/or the paired person may compensate the investor for investment losses. Following sharing norms in African societies, predicted investment is higher if loss sharing is possible, and/or profit sharing is not possible. Contrary to these predictions, we find that investment is higher when losses may not be shared or when profits may be shared with friends. A combination of directed altruism and expected reciprocity appears most plausible to explain these results.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of International Development
Depositing User: Pure Connector
Date Deposited: 04 Feb 2015 16:22
Last Modified: 19 Apr 2023 00:26
DOI: 10.1111/ecoj.12264

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