Representative governments under-invest in public goods that provide insurance against risk, The combination of inequality and risk aversion guarantees that the payoffs to insurance are skewed, so the median voter prefers a sub-optimally low level of investment. The problem is exacerbated by supermajority requirements or the need for international coordination. This accounts for some of the characteristic shortcomings of domestic public policy and represents an important obstacle to international cooperation. The argument is illustrated with reference to the Kyoto Protocol and the International Monetary Fund. The argument implies that delegation to international organizations with risk-averse preferences may be welfare enhancing.

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