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CEE-M Seminar

CEE-M Seminar

Altruism and Risk Sharing in Networks


Yann Bramoullé
CNRS research fellow in economics, AMSE, Aix-Marseille



Abstract: We provide the first analysis of the risk-sharing implications of altruism networks. Agents are embedded in a fixed network and care about each other. We study whether altruistic transfers help smooth consumption and how this depends on the shape of the network. We identify two benchmarks where altruism networks generate efficient insurance: for any shock when the network of perfect altruism is strongly connected and for any smallshock when the network of transfers is weakly connected. We show that the extent of informal insurance depends on the average path length of the altruism network and that small shocks are partially insured by endogenous risk-sharing communities. We uncover complex structural effects. Under iid incomes, central agents tend to be better insured, the consumption correlation between two agents is positive and tends to decrease with network distance, and a new link can decrease or increase the consumption variance of indirect neighbors. Overall, we show that altruism in networks has a first-order impact on risk and generates specific patterns of consumption smoothing.

Keywords: Altruism, Networks, Risk Sharing, Informal Insurance.

Co-authors : Renaud Bourlès, Yann Bramoullé and Eduardo Perez-Richet

Practical information


Site Saint-Charles
Rue du Professeur Henri Serre 34080 Montpellier

Dates & time

Oct 03, 2019


Raphaël Soubeyran
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