This folder contains the NetLogo code, the datasets of two BehaviorSpace explorations, and Rscripts used to run the analyses and create the figures as reported in 'Vriens, E., & Buskens, V. (2020). Sharing Risk under Heterogeneity: Exploring Participation Patterns in Situations of Incomplete Information. Working Paper'
Abstract paper:
Motivated by the emergence of new Peer-to-Peer insurance organizations in many countries globally (see, e.g., Friendsurance in Germany and Broodfonds in the Netherlands), we propose a model of individual decision-making in risk-sharing arrangements with risk heterogeneity and incomplete information about the risk distribution as core features. The model puts forward participation as a utility maximizing alternative for agents with higher risk levels, who are more risk averse, are driven more by solidarity motives, and less susceptible to day-to-day fluctuations. We use this basic micro-level model to simulate decision-making by agent populations in an interdependent setting. The result is a dynamic behavioral model where one agent's decision to participate depends on the characteristics and decisions of other agents in the risk-sharing group. By varying parameter settings with respect to need heterogeneity and group size on the population level, and risk aversion, solidarity, and susceptibility to fluctuations on the agent level, we predict the resilience or decay of participation. Simulation results show that successful risk-sharing arrangements are less likely in more heterogeneous populations, as alternative factors (e.g., risk aversion) can less often make up for the larger cost deficiencies. At the same time, more heterogeneous groups deal better with uncertainty and temporary cost fluctuations than more homogeneous populations do.
