Formal insurance and informal reciprocity mechanisms: experimental evidence from Ethiopia.

Last registered on September 17, 2024
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Pre-Trial

Trial Information

General Information

Title
Formal insurance and informal reciprocity mechanisms: experimental evidence from Ethiopia.
RCT ID
AEARCTR-0014373
Initial registration date
September 16, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
September 17, 2024, 1:55 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Spain
Region
Country
Ethiopia
Region

Primary Investigator

Name
Nicola Mangraviti
Affiliation
International Institute of Social Studies (EUR)
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Raffaele Miniaci
PI Affiliation
University of Brescia
Contact Investigator
PI Name
Matthias Rieger
PI Affiliation
Erasmus School of Health Policy and Management
Contact Investigator
PI Name
Zemzem Shigute Shuka
PI Affiliation
International Institute of Social Studies (EUR)
Contact Investigator
PI Name
Mansoob Murshed
PI Affiliation
International Institute of Social Studies (EUR)
Contact Investigator

Additional Trial Information

Status
In development
Start date
2024-11-01
End date
2026-01-01
Keywords
Behavior, Environment & Energy
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
The study investigates the relationship between informal support among individuals, in the
form of a risk-sharing strategy, and the presence of formal insurance in a lab-in-the field
experiment. According to the existing literature, the introduction of formal insurance in a
community is associated with a reduction of the informal support the individuals can rely on,
in terms of monetary transfers from one to each other. We propose a lab-in-the-field experiment
that consists of a repeated dictator game, allowing to investigate if formal insurance not just
decreases informal support but also improves the overall coverage from idiosyncratic shocks.
Furthermore, in the experiment we have designed, we construct a situation where the crowding-out of informal support among players, conditioned to the presence of insurance, may be less
prominent. Specifically, when individuals are engaged in a reciprocity mechanism as a risk-sharing strategy, the introduction of formal insurance might decrease informal support less due
to the presence of established self-enforcing mutual help relationships.
External Link(s)

Registration Citation

Citation
Mangraviti, Nicola et al. 2024. "Formal insurance and informal reciprocity mechanisms: experimental evidence from Ethiopia.." AEA RCT Registry. September 17. https://doi.org/10.1257/rct.14373-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention (Hidden)
Intervention Start Date
2024-12-01
Intervention End Date
2024-12-20

Primary Outcomes

Primary Outcomes (end points)
The variable used to measure the difference between treatment and control condition,
that is the availability of formal insurance that can be purchased by the players to partially
cover from the random shock, is the monetary transfer from the provider(s) to the recipient in each turn, in each group. This is the main outcome of interest.
Primary Outcomes (explanation)
In every group, in each round, there are two providers and one recipient. We
therefore have two transfer variables, s1 and s2, one for each provider in every group.

Secondary Outcomes

Secondary Outcomes (end points)
A second outcome of the experiment, which is going
to be used for additional analysis, is the difference in each round, in each group, between the two monetary
transfers s1 and s2. This is denoted with the letter n.
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We design a lab in the field game experiment randomly selecting individuals who do not have
any insurance to cover risks.
The game is designed as a repeated dictator game where a negative income shock is induced,
and investigates the extent to which people increase or reduce their monetary transfers in the
presence of an option to buy insurance. There is a treatment group and a control group. The
selected individuals in both groups are randomly matched in groups of 3 people and play
repeatedly at least for 30 periods (the number of 30 rounds follows a previous paper on the
topic, Lin, Liu, and Meng, 2014). To test the consistency of a rational risk-sharing mechanism,
the information about the duration of the game is not communicated to the players and after
the minimum number of rounds (30), the dictator game just ends. In each round, the players in
the triads are given the same income, and they are equally likely to be hit by a negative
idiosyncratic income shock with probability equal to 1/3. According to this, two players are assigned to
the role of dictators, that is help providers (P), and the player hit by the negative shock is the
recipient (R). The providers can decide to transfer part of their incomes to the recipient, that is
to the player hit by the negative income shock. Both the income assigned, and the income
shock are constant across rounds, and no formal insurance is available for the control group.
In the treatment case, a formal insurance is available for purchase at a price p since the first
round. The insurance covers 50% of the income loss so that there is space left for transfers
exchanging between players and subjects take their purchase decision at the beginning of each
round, before the realization of the random idiosyncratic income shock and their decision is
known to their triad companions.
An important aspect of the game is represented by the identity of the players, which is hidden
throughout the game, and the composition of the triads in each round. We keep the triads
constant (meaning that we do not create randomly new triads each round) so that the risk-sharing mechanism can consolidate based on the risk and other-regarding preferences of the
triad members. The personal identity remains always hidden and the players are just told at the
beginning of the game that they play every round with the same other two players. At the end
of every round, the players can observe the support choices made by the providers and therefore
they can develop their own knowledge about the other players altruism.
Experimental Design Details
Randomization Method
Randomization done in office by a computer.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
300 Individuals (estimate)
Sample size: planned number of observations
6000 obs. As the participants play the game in group of three people we have: 100 (n of triads) * 30 (n of rounds) * 2 (in every round in every group we observe 2 transfer choices) = 6000
Sample size (or number of clusters) by treatment arms
50 triads in control, 50 triads in treatment.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

Documents

Document Name
Ethics Approval
Document Type
irb_protocol
Document Description
File
Ethics Approval

MD5: f8ab76942fe0804179157da80d24e50a

SHA1: e482da26b588e532336fb4c11531decd177379ac

Uploaded At: September 16, 2024

IRB

Institutional Review Boards (IRBs)

IRB Name
ISS Research Ethics Committee
IRB Approval Date
2024-05-01
IRB Approval Number
ETH2324-0613
Analysis Plan

Post-Trial

Post Trial Information

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials