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

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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.

langue originaleAnglais
Pages (de - à)1-11
Nombre de pages11
journalJournal of Development Economics
Les DOIs
Etat de la publicationPublié - sept. 2019

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