We analyze whether the availability of formal insurance products affects informal solidarity transfers in two independent behavioral experiments in the Philippines. The first experiment allows for communication, non-anonymity and unrestricted transfers. The second experiment mimics a laboratory...

Incentivizing unobservable effort in risky environments, such as in insurance, credit, and labor markets, is vital as moral hazard may otherwise cause significant welfare losses including the outright failure of markets. Ensuring incentive-compatibility through state-contingent contracts between...