Economics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 20

For each of the following scenarios, say whether pooling or diversification is a more promising riskmitigation strategy.
a. Employees of a company who receive their salaries and health insurance from their employer and also invest their savings in that company's stocks.
b. Families who are worried about losing their possessions if their houses burn down.
c. Neighboring farmers who grow the same crop, which is prone to failure in dry years.