Tanomoshi-ko Field Study and Subjective Experiment

Abstract

Chapter 4 showed the conditions that rotating savings and credit associations (ROSCAs) can be sustainable by means of agent-based simulations and evolutionary game theory. To verify that our simulation assumption and results match the real ROSCAs and to know the existence rules of various ROSCAs, we visited Sado Island, located at the northern part of Japan, where some people are still enjoying ROSCAs. We interviewed Sado people about several types of ROSCAs, some of which had already vanished, and about the rules regarding their ROSCAs. We also conducted a laboratory experiment to investigate the mechanisms that can prevent default in a fixed ROSCA, in which the order of receipt of returns is determined before starting and is also known to members. The findings are as follows: (i) Low contributors were excluded from ROSCA groups by voting for increased contribution rates both before and after the receipt of returns; (ii) ROSCA members exhibited reciprocity and a sense of revenge, that is, members contributed to the returns payments of other members who had contributed to them, and did not contribute to the returns payments of non-contributors. Voluntary behaviors thus sustained ROSCAs. Meanwhile, an exogenous punishment whereby subjects were prevented from receiving returns payments unless they had themselves contributed previously did not increase contribution rates.