Pooling Promises with Moral Hazard ∗

4 In this paper, we extend the framework of Dubey and Geanakoplos (2002) to the case 5 of moral hazard. Risk-averse consumers, who can influence the likelihood of states of 6 nature by undertaking a hidden action, receive insurance by voluntarily participating 7 in a pool of promises of deliveries of future uncertain endowments. In exchange, they 8 gain the right to receive a share of the total return of the pool, in proportion to their 9 promises. We first analyze the equilibrium properties of the model and then illustrate 10 how an aggregate pool of promises of heterogenous consumers, differing in expected 11 endowment, results in a welfare improvement over the two segregated pools. 12