Now or later? The allocation of the pot and the insurance motive in fixed roscas

A-Tier
Journal: Journal of Development Economics
Year: 2019
Volume: 140
Issue: C
Pages: 1-11

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We start from the observation that, in fixed roscas in Sub-Saharan African, members often prefer to take the last turn. We argue that, when exchanges of turns are allowed during a cycle, a late turn allows to request the pot when an urgent need arises. Survey data indicate that insurance needs are critical in determining the preferred position of rosca members. We develop a theoretical model to formalize the argument and show that the preference for the last position requires that the probability of a shock is neither too low nor too high. We test this prediction in a lab-in-the-field experiment and confirm that the preference for being last is non-monotonic in the risk of negative shocks.

Technical Details

RePEc Handle
repec:eee:deveco:v:140:y:2019:i:c:p:1-11
Journal Field
Development
Author Count
3
Added to Database
2026-01-24