Publications [#323829] of Xiao Yu Wang

Journal Articles

1. Wang, XY, Policy-making and the adaptability of informal institutions, The World Bank Economic Review, vol. 29 no. suppl 1 (January, 2015), pp. S174-S181, Oxford University Press (OUP)
   (last updated on 2022/07/13)

   Abstract:
   This article discusses several of the insights generated by a theory of the formation of relationships between heterogeneously risk-averse individuals who lack access to formal insurance. An example illustrates the policy relevance of the theory, and demonstrates a relationship between the emergence of entrepreneurship in developing economies and higher income inequality. Reducing aggregate risk is a strict Pareto improvement if relationships in the status quo are assumed to remain constant, but is shown to be particularly harmful for the most risk-averse individuals and to exacerbate inequality when the endogenous network response is taken into account: the least risk-averse individuals abandon their roles as informal insurers in favor of entrepreneurial partnerships.