Template-Type: ReDIF-Paper 1.0 Author-Name: Todd Cherry Author-Name-First: Todd Author-Name-Last: Cherry Author-Email: cherrytl@appstate.ed Author-Workplace-Name: Department of Economics, Appalachian State University Author-Name: E. Lance Howe Author-Name-First: E. Lance Author-Name-Last: Howe Author-Email: elhowe@uaa.alaska.edu Author-Workplace-Name: Department of Economics, University of Alaska Anchorage Author-Name: James J. Murphy Author-Name-First: James Author-Name-Last: Murphy Author-Email: murphy@uaa.alaska.edu Author-Workplace-Name: Department of Economics, University of Alaska Anchorage Title: Sharing as Risk Pooling in a Social Dilemma Experiment Abstract: In rural economies with missing or incomplete markets, idiosyncratic risk is frequently pooled through informal networks. Idiosyncratic shocks, however, are not limited to private goods but can also restrict an individual from partaking in or benefitting from a collective activity. In these situations, a group must decide whether to provide insurance to the affected member. In this paper, we describe results of a laboratory experiment designed to test whether a simple sharing institution can sustain risk pooling in a social dilemma with idiosyncratic risk. We test whether risk can be pooled without a commitment device and, separately, whether effective risk pooling induces greater cooperation in the social dilemma. We find that even in the absence of a commitment device or reputational considerations, subjects voluntarily pool risk thereby reducing variance in individual earnings. In spite of effective risk pooling, however, cooperation in the social dilemma is unaffected. Creation-date: 2012-04 File-URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201201.pdf File-Format: Application/pdf Classification-JEL: C92, D81, O13, Q20, H41, D70, C90 Keywords: lab experiment, public goods, risk, shock, sharing, experimental economics, environmental economics Publication-Status: published in Ecology and Society. 20(1):68 Number: 2012-01 Handle: RePEc:ala:wpaper:2012-01