TESSA BOLD'S HOME PAGE

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About me:

I am a Junior Research Fellow at New College and a Research Officer in the Department of Economics.

Research interests:

Applied microeconomics and microeconometrics, microeconomic foundations of macroeconomics, group and network formation, contract theory, public and organizational economics, political economy.

Most of my research focuses on the theory and empirics of both dynamic and static risk-sharing contracts under incomplete enforcement and how issues of group and network formation in insurance groups affect the properties of the equilibrium contract. I am currently also working on models of optimal contract design and incentive provision in public service delivery. Applications include the education and health sector in developing country bureaucracies. Finally, I am interested in game-theoretic models of electoral behaviour and have been involved in a study on ethnic voting and political violence in the 2007 Kenyan elections.

Articles published in refereed journals:

Job Market Paper:

"Implications of Endogenous Group Formation for Efficient Risk-Sharing", Economic Journal (forthcoming).

Abstract: The existing literature on sub-game perfect risk-sharing suffers from a basic inconsistency. While a group of size n is able to coordinate on a risk-sharing outcome, it is assumed that deviating subgroups cannot. We relax this assumption and characterize the optimal contract among all coalition-proof history-dependent contracts. This alters the predictions of the standard dynamic limited commitment model. We show that the consumption of constrained agents depends on both the history of shocks and its interaction with the current income of other constrained agents. From this, we derive a formal test for the presence of endogenous group formation under limited commitment.

"Perceptions and reality: Economic voting at the 2004 European Parliament elections", with James Tilley and John Garry, European Journal of Political Research 47(5) (2008), 665-686.

"Group-based Funeral Insurance in Ethiopia and Tanzania", with Stefan Dercon, Joachim de Weerdt and Alula Pankhurst, World Development 34(4) (2006), 685-703.

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Articles under review:

"Contract Design in Insurance Group", with Stefan Dercon.

Abstract: In many rural settings, informal mutual support networks have evolved into semiformal insurance groups, such as funeral societies. Using detailed panel data for six villages in Ethiopia, we show that these groups are vehicles for risk- sharing. We can also distinguish two types of contracts, in terms of whether payments are only made at the time of death or savings are accumulated by the group based on premiums paid ex-ante. We characterize these contracts within the class of symmetric and stationary coalition-proof risk-sharing contracts, and we show numerically that a contract with savings makes higher demands on enforceability, leading to less cohesive groups finding it in their interest to choose the contract without savings and that coalition-proofness is a necessary condition for the coexistence of both contract types. We show in the data that the type of contract chosen by groups is correlated with the level of trust and other enforcement improving factors. We also predict that among the observed contracts, those with group-based savings and ex-ante payments will attain higher welfare in terms of consumption smoothing than those observed using no group savings. Using panel data, and controlling for household fixed effects and time-varying village level fixed effects, we show that contract type matters for performance in line with these predictions. The results appear robust to endogeneity of group formation and endogenous selection into contract types.

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Working Papers:

"Ethnicity and Violence in the 2007 Kenyan elections", (with S. Dercon, M. Bratton, R. Gutierrez-Romero, M. Kimenyi), published as Afrobarometer Briefing Paper, 2008, No. 48

"Insurance for the Poor", (with S. Dercon and C. Calvo) Sustainable Development Department Technical Paper (2006), IFM-145, Inter-American Development Bank, Washington D.C.

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Work in Progress

"Coalition-Proof Dynamic Risk-Sharing: Theory and Evidence"

"Risk-Sharing in Overlapping Insurance Groups"

Abstract: This paper studies informal insurance in overlapping risk-sharing groups. To do so we formulate a model of risk-sharing in networks under imperfect commitment in which network structure and insurance transfers are determined simultaneously. Each insurance group is modeled as a club in the sense that the benefits from insurance depend on the number of insurance partners but are independent of the way in which they are connected to each other within the group. Link structure matters in connecting insurance groups in the community and transfers can only flow across groups via individuals with multiple group membership. We solve for the optimal insurance scheme under the requirement that transfers must be self-enforcing. Self-enforcement entails that within each insurance group an individual or subgroup of individuals who renege on all or part of their stipulated transfers are thereafter excluded from the insurance group forever, but may continue risk-sharing in the deviating subgroup provided it is stable to further deviations. In contrast, individuals that link groups via multiple group memberships can renege on their transfers to one group without suffering any adverse consequences in any of the others. As a result the linking agent with multiple group memberships is always at least as well off as agents with a single group membership. We show with the aid of simulations that risk-sharing with overlapping group membership may be a useful way to improve the benefits from risk-sharing over and above mutually exclusive groups when risk-sharing is limited by self-enforcement for two reasons. Firstly, risk-sharing groups with overlapping memberships are stable for a larger range of parameters than mutually exclusive groups because overall enforcement constraints are easier to satisfy in such a group structure. Secondly, risk-sharing with overlapping groups may increase the sum of the utilities of all risk-sharing partners. Finally, we explore what partial correlations between own consumption, own income and aggregate resources we can expect to observe in sample data if the underlying data generating process is one of partial insurance in overlapping risk-sharing groups.

"Determinants of educational achievement in Kenyan primary schools since the introduction of Free Primary Education" (Slides from CSAE Conference March 2009), with Mwangi Kimenyi, Germano Mwabu and Justin Sandefur

"The effect of teacher incentives in Kenyan Primary Schools: Evidence from a randomized impact evaluation." (Link to project website), with Justin Sandefur, Germano Mwabu and Mwangi Kimenyi

"The provision of social services in fragile states: a new modality", with Paul Collier and Andrew Zeitlin

"Measuring the quality of public service delivery", with Bernard Gauthier, Jakob Svennson and Waly Wane

"Expressive and instrumental motivations in African elections - A Calibrated Bootstrapping Approach", with Tiago Mendes

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Book Chapters:

"Public service delivery: education", In P. Collier and C. Adam (eds.), forthcoming 2010, Kenya: Policies for Prosperity, Oxford University Press.

"Membership-based indigenous insurance associations in Ethiopia and Tanzania", In M. Chen, R. Jhabvala, R. Kanbur and C. Richards (eds.), 2007, Membership-Based Organizations of the Poor, Routledge.

"Insurance for the Poor?’ In A. Barrientos and D. Hulme (eds.), 2007, Social Protection for the Poor and the Poorest: Risk, Needs and Rights, Palgrave.

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