Mutual insurance in the village and beyond
When formal insurance is unavailable, mutual insurance among households can serve as an alternative. This paper analyzes a game between two agents who face uncertainty and maximize discounted utility without enforceable contracts or access to capital markets. While autarky is always a possible outco...
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| Main Authors: | , , |
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| Format: | Article (Journal) |
| Language: | English |
| Published: |
23 February 2026
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| In: |
Dynamic games and applications
Year: 2026, Pages: 1-27 |
| ISSN: | 2153-0793 |
| DOI: | 10.1007/s13235-025-00692-w |
| Online Access: | Verlag, lizenzpflichtig, Volltext: https://doi.org/10.1007/s13235-025-00692-w
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| Author Notes: | Clive Bell, Hans Gersbach, Hans Haller |
| Summary: | When formal insurance is unavailable, mutual insurance among households can serve as an alternative. This paper analyzes a game between two agents who face uncertainty and maximize discounted utility without enforceable contracts or access to capital markets. While autarky is always a possible outcome, a mutually beneficial, trigger-strategy equilibrium can be achieved when the agents are sufficiently, but not necessarily equally, patient, and may have different distributions of income and willingness to bear risk. Full insurance is possible with strongly negatively correlated endowments, and partial insurance is generally feasible. Mutual insurance may well be able to coexist with organized banking and storage as these function in practice. The analysis has applications in various institutional settings, in particular to the custom of exogamy. |
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| Item Description: | Online veröffentlicht: 23. Februar 2026 Gesehen am 25.03.2026 |
| Physical Description: | Online Resource |
| ISSN: | 2153-0793 |
| DOI: | 10.1007/s13235-025-00692-w |