, Volume 6, Issue 2, pp 173-187

Reciprocal insurance among Kenyan pastoralists

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Abstract

In large areas of low and locally variable rainfall in East Africa, pastoralism is the only viable activity, and cattle are at risk of reduced milk output and even death in dry periods. The herders were nomadic, but following the Kenyan government’s scheme of giving titles to group ranches, they are evolving reciprocity arrangements where a group suffering a dry period can send some of its cattle to graze on lands of another group that has better weather. We model such institutions using a repeated game framework. As these contracts are informal, we characterize schemes that are optimal subject to a self-enforcement or dynamic incentive compatibility condition. Where the actual arrangements differ from the predicted optima, we discuss possible reasons for the discrepancy and suggest avenues for further research.

This research was conducted using the resources of the Cornell Center for Advanced Computing, which receives funding from Cornell University, the National Science Foundation, and other leading public agencies, foundations, and corporations. We also thank the Mpala Research Center, Kenya for its support to our research as well as the people of Kenya (Research Permit No. NCST/5/002/R/648) and Princeton University’s Grand Challenges Program. Levin was supported by NSF Grant EF-1137894 and Rubenstein by NSF Grants IBN-9874523, CNS-025214, and IOB-9874523, all from Princeton University.