experimental analysis.

This paper describes and analyzes the results of a unique field experiment especially designed to test the effects of the level of commitment and information available to individuals when sharing risk. We find that limiting extrinsic commitment is associated with less risk sharing, while limiting information on defection can be associated with more risk sharing. These results can be understood by distin-guishing between intrinsic and extrinsic incentives, and by recognizing that social sanctions are costly to inflict or that individuals suffer from time-inconsistent pref-erences. Comparing the groups formed within our experiment with the real life risk sharing networks in a few villages allows us to test the external validity of our experiment and suggests that the results are salient to our understanding of risk sharing arrangements observed in developing countries. JEL Classification Numbers: C93; D71; D81; O12. Key Words: Field experiment; risk sharing; social sanctions; insurance; limited commitment; asymmetry of information. We are grateful for comments by seminar participants at the Centre for the Study o