Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia
Index insurance lowers agricultural risk but covers only covariate risks. Since farmers do not have complete insurance, they may develop mistrust of insurance when experiencing crop losses and not receiving payouts. Although recent innovations in remote sensing enable the provision of more complete...
| Autores principales: | , , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Wiley
2026
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/175964 |
| _version_ | 1855514024995717120 |
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| author | Kramer, Berber Porter, Maria Wassie, Solomon B. |
| author_browse | Kramer, Berber Porter, Maria Wassie, Solomon B. |
| author_facet | Kramer, Berber Porter, Maria Wassie, Solomon B. |
| author_sort | Kramer, Berber |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Index insurance lowers agricultural risk but covers only covariate risks. Since farmers do not have complete insurance, they may develop mistrust of insurance when experiencing crop losses and not receiving payouts. Although recent innovations in remote sensing enable the provision of more complete insurance including coverage for idiosyncratic risks, such insurance introduces differences in payouts within social networks, which might be considered unfair, introduce jealousy, and depress insurance demand. We conduct a lab-in-the-field experiment with farmers in Ethiopia to examine whether providing complete insurance coverage affects perceived fairness and insurance demand. We also examine effects of informing farmers about neighbors' payout experiences. We find that such social comparison increases perceived fairness of index insurance. Providing complete crop insurance increases perceived fairness of outcomes and willingness to pay for insurance, without introducing jealousy over neighbors receiving different payouts. These results are concentrated among men and those with little insurance knowledge. |
| format | Journal Article |
| id | CGSpace175964 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2026 |
| publishDateRange | 2026 |
| publishDateSort | 2026 |
| publisher | Wiley |
| publisherStr | Wiley |
| record_format | dspace |
| spelling | CGSpace1759642026-01-02T15:32:42Z Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia Kramer, Berber Porter, Maria Wassie, Solomon B. agriculture farmers insurance remote sensing Index insurance lowers agricultural risk but covers only covariate risks. Since farmers do not have complete insurance, they may develop mistrust of insurance when experiencing crop losses and not receiving payouts. Although recent innovations in remote sensing enable the provision of more complete insurance including coverage for idiosyncratic risks, such insurance introduces differences in payouts within social networks, which might be considered unfair, introduce jealousy, and depress insurance demand. We conduct a lab-in-the-field experiment with farmers in Ethiopia to examine whether providing complete insurance coverage affects perceived fairness and insurance demand. We also examine effects of informing farmers about neighbors' payout experiences. We find that such social comparison increases perceived fairness of index insurance. Providing complete crop insurance increases perceived fairness of outcomes and willingness to pay for insurance, without introducing jealousy over neighbors receiving different payouts. These results are concentrated among men and those with little insurance knowledge. 2026 2025-08-04T18:34:26Z 2025-08-04T18:34:26Z Journal Article https://hdl.handle.net/10568/175964 en https://purl.umn.edu/339075 Open Access Wiley Kramer, Berber; Porter, Maria; and Wassie, Solomon B. Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia. Journal of Risk and Insurance. Article in press. FIrst published online July 31, 2025. https://doi.org/10.1111/jori.70015 |
| spellingShingle | agriculture farmers insurance remote sensing Kramer, Berber Porter, Maria Wassie, Solomon B. Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia |
| title | Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia |
| title_full | Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia |
| title_fullStr | Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia |
| title_full_unstemmed | Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia |
| title_short | Basis risk, social comparison, perceptions of fairness, and demand for insurance: A field experiment in Ethiopia |
| title_sort | basis risk social comparison perceptions of fairness and demand for insurance a field experiment in ethiopia |
| topic | agriculture farmers insurance remote sensing |
| url | https://hdl.handle.net/10568/175964 |
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