Reciprocity without commitment

  • Coate S
  • Ravallion M
  • 42


    Mendeley users who have this article in their library.
  • N/A


    Citations of this article.


Various risk sharing arrangements are common in underdeveloped agrarian economies where households have no formal means of contract enforcement and little access to risk markets. Social insurance is still possible through repeated interaction in an environment with few informational asymmetries. In a simple repeated game model of two self-interested households facing independent income streams, we characterize the best arrangement that can be sustained as a noncooperative equilibrium. We establish precisely how this optimal informal arrangement differs from first best-risk sharing, and identify the conditions under which the divergence between the two is greatest.

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document


  • Stephen Coate

  • Martin Ravallion

Cite this document

Choose a citation style from the tabs below

Save time finding and organizing research with Mendeley

Sign up for free