Risk Sharing and Network Formation

Interpersonal relationships have long been suspected of shaping agrarian institutions, probably because weak formal institutions must be supplemented by interpersonal trust. This is particularly true for informal risk sharing, a fundamental risk coping mechanism for the rural poor (e.g. Mark R. Rosenzweig, 1988, Marcel Fafchamps, 1992, Stephen Coate and Martin Ravallion, 1993, Robert Townsend, 1994, Ethan Ligon et al., 2001, Andrew Foster and Mark R. Rosenzweig, 2001).