@techreport{Lohse2012Public,
abstract = {Motivated by recent disasters, this paper analyzes the risk sharing aspect in a federation. The regions can be hit by a shock leading to losses that occur with an exogenous probability and in a stochastically independent way. The regions can spend effort on selfinsurance to reduce the size of the loss. Being part of a federation has two countervailing -elfare effects. On the one hand, there is the well known welfare increase due to risk pooling. On the other hand, the self-insurance effort is a public good, because all regions benefit from the reduction of the loss. There exists a Samaritan's dilemma kind of effect whereby regions reduce their self-insurance effort potentially leading to an overall welfare decrease. The central government can solve this dilemma by committing to fixed rather than variable transfers. This induces regions that behave non-cooperatively to still choose the efficient level of self-insurance effort.},
address = {Berlin},
author = {Tim Lohse and Julio R. Robledo},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {H77; H41; H72; 330; intergovernmental transfers; self-insurance; disaster policy; Finanzausgleich; Gefangenendilemma; Katastrophenhilfe; Schock; Selbstversicherung; Theorie},
language = {eng},
number = {SP II 2012-103},
publisher = {WZB},
title = {Public self-insurance and the Samaritan's dilemma in a federation},
type = {Discussion papers, Wissenschaftszentrum Berlin f\"{u}r Sozialforschung, Schwerpunkt M\"{a}rkte und Politik: Forschungsprofessur & Projekt The Future of Fiscal Federalism},
url = {http://hdl.handle.net/10419/56051},
year = {2012}
}
