Internal constraints to risk-sharing and demand for insurance: A lab-in-the-field analysis in Ghana
Last registered on February 13, 2020

Pre-Trial

Trial Information
General Information
Title
Internal constraints to risk-sharing and demand for insurance: A lab-in-the-field analysis in Ghana
RCT ID
AEARCTR-0005290
Initial registration date
January 17, 2020
Last updated
February 13, 2020 12:52 PM EST
Location(s)

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Primary Investigator
Affiliation
The Catholic University of America
Other Primary Investigator(s)
Additional Trial Information
Status
In development
Start date
2020-01-18
End date
2020-08-31
Secondary IDs
Abstract
Low income households in agrarian developing economies continue to face considerable agricultural and livelihood risks which have serious negative impacts on household welfare. Incomplete insurance markets present an external constraint to risk management and are well studied in the literature. A growing literature has focused on internal constraints to development such as how time inconsistent preferences or aspiration failures can negatively affect saving and investment behavior. Here I propose that internal constraints may also hinder risk management. Specifically, I propose that concerns over fairness that arise in a context of wealth inequality may hinder the development of efficient informal risk management networks and influence the demand for formal insurance products. To test this theory, I utilize a framed field experiment conducted among smallholder farmers in northern Ghana to investigate the role of wealth inequality and fairness on participation in formal and informal risk sharing tools.
External Link(s)
Registration Citation
Citation
Gallenstein, Richard. 2020. "Internal constraints to risk-sharing and demand for insurance: A lab-in-the-field analysis in Ghana ." AEA RCT Registry. February 13. https://doi.org/10.1257/rct.5290-1.2000000000000002.
Sponsors & Partners

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Experimental Details
Interventions
Intervention(s)
I conduct a lab-in-the-field experiment among rural households in northern Ghana. The lab experiment is designed to measure participants' views of fairness, willingness to participate in risk-sharing, and demand for insurance in the context of wealth inequality. More details on the design are provided in the attached analysis plan.
Intervention Start Date
2020-01-18
Intervention End Date
2020-04-04
Primary Outcomes
Primary Outcomes (end points)
Participation in Risk-Sharing.
Self allocation of group income.
Decision to purchase insurance
Primary Outcomes (explanation)
Participation in Risk-Sharing: This will be measured in a couple ways. First, participants will have the opportunity to make risk sharing agreement offers. We will measure how much of their total earning they offer to their partner and how much they expect from their partner in their risk sharing agreement offers. Second, we will measure whether or not they accept the offer of their partner.

Self allocation of group income: In the experiment participants will be anonymously paired and then observe the realization of a randomly determine income. They will then make decisions about how to allocate the total income. These decisions will be used the measure fairness preferences.

Decision to purchase insurance: Participants will face a binary decision to purchase insurance or not.
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
A full description of the experiment is provided in detail in the attached analysis plan. Below is a concise summary:

I plan for a sample of roughly 400 participants. These participants will participate in one session that will include roughly 12 total participants. Each session will include three experimental games. In each game, participant will begin with some initial endowment which they must invest in a business venture. The outcome of their investment will be determine by a draw from a bag that contains 10 painted wooden balls with one color indicating success and the other failure. The first game measures risk preferences, the second game measures fairness preferences, and the third game measures participants' willingness to manage risk through insurance or informal risk sharing.
Experimental Design Details
Not available
Randomization Method
All randomization procedures during the lab experiment are conducted using draws of different colored wooden balls from black bags by participants in the experiment.
Randomization Unit
Individual.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
550 individual.
Sample size: planned number of observations
I will play 3 games with roughly 8 round per game. With 550 participants, I plan to have a total number of observations of roughly 13,200.
Sample size (or number of clusters) by treatment arms
Each participant will play each game in my experiment.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Ohio State University IRB
IRB Approval Date
2020-01-16
IRB Approval Number
00006378
Analysis Plan

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