The Cooperation Mechanism Of Folk ROSCA

Most of Chinese rural exist the phenomenon of formal finance supply shortages.ROSCA as an important informal financial system exists widely in our rural.According to the cooperation between individuals in the organization,this article attempts to discuss deep level cooperation from the perspective of micro-entity.Through the establishment of individual utility function to discuss the cooperation between the participants and the organizer which are divided into two parts,the first part consider the game between the participants in isolation,through the establishment of the utility function about a single participant,discuss the solution of cooperation,then bring in the discount factor, discuss the necessary conditions of cooperative equilibrium solution in the repeated game；the second part base on the cooperation between participants,consider the participants as a principal,the organizer as a agent,according to the Principal-Agent theory,discuss the cooperative equilibrium solution between the information symmmetry and asymmetry.The main conclusion that:1,there is a number N* ,which make the participant's effort level equal to the organization's request, achieve Pareto Optimality；otherwise, if the number N>N*,which means a large number in ROSCA,people will produce an hitchhiking behavior, lead to the "prisoner's dilemma"；2,the participant and the organizer tend to cooperate:when the incentive discountβ:M≤β≤K；the organizer will not cooperate:when the incentive discountβ:O≤β≤M；the participant will not cooperate:when the incentive discountβ:K≤β≤N.These hYPothesizes are also supported by many realistic cases.