| Abstract: | Village funeral societies in north-east Thailand collect equal contributions from all participating households, even though some households are much more likely to experience deaths and receive money from the funeral society than others. The societies' use of the equal contributions rule is not an outcome of the asymmetric distribution of information on risks. It reflects, instead, an ambivalence over the relevance of expected returns, a willingness to subsidise fellow villagers, and the need to maximise simplicity and transparency to safeguard against mismanagement and corruption. The equal contributions rule is efficient, in that it leads to low administrative costs, has no clearly superior alternatives, and creates only minor adverse selection. |
