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Transfers motivated by altruism, guilt, and norms of giving play an important role in supporting individuals who suffer losses due to risk. We present empirical evidence from an artefactual field experiment in Ethiopia in which we introduce formal insurance in a setting where donors make redistributive transfers to recipients who experience losses. We find that donors tend to reduce their transfers to recipients who are offered insurance, whether or not they take it up. When insurance is rejected by a recipient, transfer reductions are larger for donors who firmly expect that the recipient would take up insurance. The results are consistent with a framework in which the introduction of insurance erodes norms of giving by revealing differences in the extent to which individuals value precautionary behavior with respect to risk-taking. Welfare calculations show that when formal insurance is introduced, the welfare of those who fail to take it up may be reduced.

Information decay in networks generates two effects. First, it differentiates how well informed different players within the same component are, and therefore how attractive they are to sponsor links to. Second, players may prefer to sponsor links to players they are already connected to. By focusing on small decay we analyze the first effect in isolation. We characterize the set of Nash equilibrium networks in the two-way flow model of network formation with small decay for any increasing benefit function of the players. The results show that small decay is consistent with two well-known stylized facts, namely that (i) many real world networks have high diameters, and (ii) that the diameter of such networks is typically small relative to the population size. We show that even stochastically stable networks may have any diameter when the benefit function is linear or strictly concave. Finally we study implied stability relations. We find that if any non-empty minimal network is stable, then so is the periphery-sponsored star. With strictly convex benefit functions, we find that other stars tend to be stable for a larger range of parameters than larger diameter networks which satisfy our characterization. However, with strictly concave benefit functions the other stars are stable for a smaller range of parameters than the larger diameter networks.

Empirical work suggests that the network of research and development alliances is asymmetric, with a small number of firms involved in the majority of partnerships. This paper relates the structure of the collaboration network to a fundamental characteristic of the demand for research output: the benefits of knowledge accumulation create private and social incentives for a concentration of collaborative activities. I theoretically investigate the formation of bilateral collaborative links in two different industry settings, one socially managed, the other oligopolistic. I find that in both cases a concentrated network is the typical equilibrium structure as well as the socially efficient structure.