We consider the problem of stabilising the income of a country, henceforth the borrower, which would always prefer a stable income to a random income with the same average, i.e. a country which is risk-averse. This would be appropriate for countries which are heavily reliant upon agricultural...

The fluctuations in incomes inherent in rural communities can be attenuated by reciprocal insurance. We develop a model of such insurance based on self-interested behaviour and voluntary participation. One individual assists another only if the costs of so doing are outweighed by the benefits...