ETH Zuerich - Homepage

Paper: ETH-RC-13-006

Title: Risk Sharing Capacity: Markets versus Households

Authors: Hans Gersbach*, Hans Haller


We introduce uncertainty in our general equilibrium model with multi-member groups, following the classical state-space approach of Arrow- Debreu. A host of new interesting economic issues emerge. First, risk averse agents can attempt to insure themselves through markets or through mutual insurance within a multi-member group, say a household, by pooling resources within the group. Which insurance mechanism is chosen and to which extent the mechanisms substitute or complement each other is an open question. Second, one may ask more specifically what is the role of social groups for risk sharing and risk allocation when agents face idiosyncratic or aggregate risk. Third, does a suitable combination of social group formation and contingent commodity markets yield efficient risk allocations? We present a series of examples that shed some light on these issues.

Keywords: Household Behavior, Risk Allocation, General Equilibrium

Manuscript status: Preprint

JEL codes: D13, D51, D61, D70, D80
PACS numbers:

Local copy of the paper: ETH-RC-13-006.pdf

Submission date: 14-10-2013

Wichtiger Hinweis:
Diese Website wird in älteren Versionen von Netscape ohne graphische Elemente dargestellt. Die Funktionalität der Website ist aber trotzdem gewährleistet. Wenn Sie diese Website regelmässig benutzen, empfehlen wir Ihnen, auf Ihrem Computer einen aktuellen Browser zu installieren. Weitere Informationen finden Sie auf
folgender Seite.

Important Note:
The content in this site is accessible to any browser or Internet device, however, some graphics will display correctly only in the newer versions of Netscape. To get the most out of our site we suggest you upgrade to a newer browser.
More information