Matching to Share Risk without Commitment
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Gierlinger, J and Laczo, Sarolta (2017) Matching to Share Risk without Commitment Economic Journal, 126 (613). pp. 2003-2031.
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Abstract
This paper studies the effect of limited commitment on sorting when two sides of a frictionless market form pairs to share risk. On each side, agents are identical except for their risk preferences. First, we provide analytical results when transfers do not condition on the history of shocks. More risk-averse agents can commit to larger transfers, as long as their consumption is less risky than their endowment. With sufficiently large idiosyncratic risk and sufficient discounting of the future, matching is positive assortative, unlike under full commitment. Second, we find positive-assortative stable matchings when transfers are history dependent using a numerical algorithm.
| Item Type: | Article | |||||||||
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| Subjects : | Economics | |||||||||
| Divisions : | Faculty of Arts and Social Sciences > School of Economics | |||||||||
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| Date : | 14 March 2017 | |||||||||
| DOI : | 10.1111/ecoj.12490 | |||||||||
| Copyright Disclaimer : | This is the peer reviewed version of the following article: Gierlinger, J. and Laczó, S. (2017), Matching to Share Risk without Commitment. Econ J. doi:10.1111/ecoj.12490, which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/ecoj.12490/full. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving. | |||||||||
| Uncontrolled Keywords : | assortative matching, imperfectly transferable utility, risk sharing, limited commitment | |||||||||
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| Depositing User : | Symplectic Elements | |||||||||
| Date Deposited : | 04 Jan 2017 12:21 | |||||||||
| Last Modified : | 02 Sep 2019 02:08 | |||||||||
| URI: | http://epubs.surrey.ac.uk/id/eprint/813193 |
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