Back to History Current Version

Internal constraints to risk-sharing and demand for insurance: A lab-in-the-field analysis in Ghana

Last registered on January 21, 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

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
January 21, 2020, 2:06 PM EST

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

Locations

Region

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
2020-02-15
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. January 21. https://doi.org/10.1257/rct.5290-1.0
Sponsors & Partners

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information
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
2020-02-15

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
The first game resembles a standard risk preference game in which participants will make a decision between safe and risky investment alternatives. They will choose between a fixed income and the outcome of the draw from their bag.

The second game is intended to measure fairness preferences. In this game participants will be formed into anonymous pairs. The outcomes from their draws will be pooled and then each participant will have the opportunity to state how they would like that total to be allocated between the two.

The third game measures risk sharing. In this game, again participants are formed into anonymous pairs. Before making draws, each participant has an opportunity to make a risk sharing offer to their partner in which they state the allocation of total income if they succeed but their partner fails or vice versa. Then they will have the opportunity to accept or reject their partner's offer. In some rounds, participants will also have an opportunity to purchase an insurance policy instead of sharing risks with their partner.
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
400 individual.
Sample size: planned number of observations
I will play 3 games with roughly 10 round per game. With 400 participants, I plan to have a total number of observations of roughly 12,000.
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

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information
IRB

Institutional Review Boards (IRBs)

IRB Name
Ohio State University IRB
IRB Approval Date
2020-01-16
IRB Approval Number
00006378
Analysis Plan

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

Post-Trial

Post Trial Information

Study Withdrawal

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

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