Family Altruism and Incentives

Gatti, Roberta

World Bank, Washington, DC

关键词: ASYMMETRIC INFORMATION;    ATTENTION;    BENCHMARK;    BUDGET CONSTRAINTS;    COMMON GOOD;   

DOI  :  10.1596/1813-9450-2505
RP-ID  :  WPS2505

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The author builds on the altruisticmodel of the family, to explore the strategic interactionbetween altruistic parents, and selfish children, whenchildren's efforts are endogenous. If there isuncertainty about the amount of income the children willrealize, and if parents have imperfect information, thechildren have an incentive to exert little effort, and torely on their parent's altruistically motivatedtransfers. Because of this, parents face a tradeoff betweenthe insurance that bequests implicitly provide theirchildren, and the disincentive to work prompted by theiraltruism. The author shows that if parents can crediblycommit to a pattern of transfers, they will choose not tocompensate children in bad outcomes, as much as predicted bythe standard (no uncertainty, no asymmetric information)dynastic model of the family. Alternatively, parents maychoose to forgo any insurance, and offer a fixed level ofbequest, to elicit greater effort from their children. Theoptimal transfers structure that the author derives,reconciles the predictions of the altruistic family model,with much of the existing evidence on inter-generationaltransfers, which suggests that parents compensate onlypartially, or not at all, for earnings differentials amongtheir children. Moreover, the author shows that Ricardianequivalence holds in this setup, except when non-negativityconstraints are binding.