Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/unm/umagsb/2013045.html
   My bibliography  Save this paper

Risk taking and risk sharing does responsibility matter?

Author

Listed:
  • Cettolin, E.

    (General Economics 1 (Micro))

  • Tausch, F.

    (General Economics 1 (Micro))

Abstract
Risk sharing arrangements diminish individuals’ vulnerability to probabilistic events that negatively affect their financial situation. This is because risk sharing implies redistribution, as lucky individuals support the unlucky ones. We hypothesize that responsibility for risky choices decreases individuals’ willingness to share risk by dampening redistribution motives, and investigate this conjecture with a laboratory experiment. Responsibility is created by allowing participants to choose between two different risky lotteries before they decide how much risk they share with a randomly matched partner. Risk sharing is then compared to a treatment where risk exposure is randomly assigned. We find that average risk sharing does not depend on whether individuals can control their risk exposure. However, we observe that when individuals are responsible for their risk exposure, risk sharing decisions are systematically conditioned on the risk exposure of the sharing partner, whereas this is not the case when risk exposure is random.

Suggested Citation

  • Cettolin, E. & Tausch, F., 2013. "Risk taking and risk sharing does responsibility matter?," Research Memorandum 045, Maastricht University, Graduate School of Business and Economics (GSBE).
    • Handle: RePEc:unm:umagsb:2013045
    as

    Download full text from publisher

    File URL: https://cris.maastrichtuniversity.nl/portal/files/1392004/content
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Franziska Tausch & Jan Potters & Arno Riedl, 2014. "An experimental investigation of risk sharing and adverse selection," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 167-186, April.
    2. Elena Cettolin & Arno Riedl, 2017. "Justice Under Uncertainty," Management Science, INFORMS, vol. 63(11), pages 3739-3759, November.
    3. Embrey, Matthew & Hyndman, Kyle & Riedl, Arno, 2021. "Bargaining with a residual claimant: An experimental study," Games and Economic Behavior, Elsevier, vol. 126(C), pages 335-354.
    4. Ingrid T. Rohde & Kirsten M. Rohde, 2015. "Managing social risks – tradeoffs between risks and inequalities," Journal of Risk and Uncertainty, Springer, vol. 51(2), pages 103-124, October.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:unm:umagsb:2013045. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Andrea Willems or Leonne Portz (email available below). General contact details of provider: https://edirc.repec.org/data/meteonl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.