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Sources of Risk, Institutions for Survival, and a Game Against Nature in Premodern Iceland

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Type: Conference Paper
Author: Eggertsson, Thráinn
Conference: The Present and Future of the New Institutional Economics, the First Annual Conference of the International Society for New Institutional Economics
Location: St. Louis, MO
Conf. Date: September 19-21, 1997
Date: 1997
URI: https://hdl.handle.net/10535/547
Sector: Social Organization
Region: Europe
Subject(s): contracts
game theory
social organization
property rights
new institutionalism
Abstract: "Random environmental factors, such as climatic disturbance or disease, often cause large variation in the outputs of poor agrarian communities which operate with low levels of technology. As lives may be at stake, traditional societies have a strong incentive to seek ways to reduce variability over time in their consumption, but high costs of transacting in these communities usually prevent or limit the use of insurance, credit and other intertemporal markets. Recent studies show, however, that traditional societies are able to stabilize their consumption and lower the cost of risk by relying on various non-market institutional arrangements and adjustments in production. Newbery (1989) combines the economics of risk and the information-transaction costs perspective in a lucid survey of the theory of agricultural institutions for insurance and stabilization. Also using the transaction-cost framework, Binswanger and Rosenzweig (1986) lay out a general theory of economic institutions in traditional rural areas; Binswanger and Mclntire(1987) explore the structure of land-abundant tropical agriculture, and Binswanger, McIntire and Undry (1989) analyze institutions in semi-arid African agriculture. Bromley and Chavas (1989)."

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