The theory of the Samaritan’s dilemma posits a downside to private or public charity: recipients may begin to rely on free aid instead of their own efforts. An important application is government aid. When the government acts as an “insurer of last resort”, potential beneficiaries may reduce private insurance coverage and instead rely on the government to bail them out. This phenomenon can incr...

The present study estimates the probability density function of the Federal Risk Management Agency’s (RMA) net income from reinsuring crop insurance for corn, wheat, and soybeans. Based on 1997 data, it is estimated that there is a 5 percent probability that RMA will need to reimburse at least $1 billion to insurance companies, and that the fair value of RMA’s reinsurance services to insurance ...

This thesis examines various aspects of environmental economics. The first chapter estimates how individuals' beliefs about climate change are affected by local weather fluctuations. Climate change is a one-time uncertain event with no opportunities for learning; the belief updating process may not be fully Bayesian. Using unique survey data on beliefs about the occurrence of the effects of glo...

This paper examines the potential for adverse selection when farmers are offered a portfolio of insurance policies. We analyze the risk characteristics farmers who bought alternative insurance instruments in 1996-97. Inability to differentiate farmers according to risk types results in poor actuarial performance of insurance product. —————————————— Authors gratefully acknowledge helpful comment...

Article History Received: 27 March 2017 Revised: 20 April 2017 Accepted: 24 May 2017 Published: 19 June 2017

Can the availability of poorly-designed government insurance alter technology adoption decisions? A theoretical model of technology adoption and insurance incentive effects for a highand low-risk technology is developed and explored empirically using a unique dataset of skip-row agronomic trial data. A multivariate nonparametric resampling technique is developed, which augments the trial data w...

This paper tests the efficiency of insurance markets in the Pakistan Punjab by examining how crop choices are affected by the presence of price and yield risk. We estimate reduced-form and structural models of crop choices. Although we cannot reject the hypothesis that village members efficiently share risk among themselves, production choices are shown to depend on risk. Existing risk sharing ...

Indemnifying smallholder farmers against crop loss is thought to be infeasible due to information problems. Consequently there is interest in developing alternative, partial, insurance products. Examples include rainfall insurance and the limited liability inherent in credit contracts. I argue that while these products may reduce information asymmetry, ambiguity averse farmers struggle to asses...