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Asymmetry of Information within Family Networks

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  • Joachim De Weerdt
  • Garance Genicot
  • Alice Mesnard

Abstract

This paper studies asymmetry of information and transfers within 712 extended family networks from Tanzania. Using cross-reports on asset holdings, we construct measures of misperception of living standards among households within the same network. We contrast altruism, pressure, exchange, and risk sharing as motives to transfer in simple models with asymmetric information. Testing the model predictions in the data uncovers the active role played by recipients of transfers. Our findings suggest that recipients set the terms of the transfers, either by exerting pressure on donors or because they hold substantial bargaining power in their exchange relationships.

Suggested Citation

  • Joachim De Weerdt & Garance Genicot & Alice Mesnard, 2019. "Asymmetry of Information within Family Networks," Journal of Human Resources, University of Wisconsin Press, vol. 54(1), pages 225-254.
    • Handle: RePEc:uwp:jhriss:v:54:y:2019:i:1:p:225-254
    Note: DOI: 10.3368/jhr.54.1.0616.8023R1
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    Cited by:

    1. Brian Dillon & Joachim De Weerdt & Ted O’Donoghue, 2021. "Paying More for Less: Why Don’t Households in Tanzania Take Advantage of Bulk Discounts?," The World Bank Economic Review, World Bank Group, vol. 35(1), pages 148-179.
    2. Ambler, Kate, 2015. "Don't tell on me: Experimental evidence of asymmetric information in transnational households," Journal of Development Economics, Elsevier, vol. 113(C), pages 52-69.
    3. Orazio Attanasio & Sonya Krutikova, 2020. "Consumption Insurance in Networks with Asymmetric Information," NBER Working Papers 27290, National Bureau of Economic Research, Inc.
    4. Genicot, Garance, 2016. "Two-sided altruism and signaling," Economics Letters, Elsevier, vol. 145(C), pages 92-97.
    5. Catia Batista & Janis Umblijs, 2016. "Do migrants send remittances as a way of self-insurance?," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 108-130.
    6. De Arcangelis, Giuseppe & Joxhe, Majlinda & McKenzie, David & Tiongson, Erwin & Yang, Dean, 2015. "Directing remittances to education with soft and hard commitments: Evidence from a lab-in-the-field experiment and new product take-up among Filipino migrants in Rome," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 197-208.
    7. Marlon Seror, 2015. "Modeling and Measuring Information Asymmetry in the Context of Senegalese Migrants' Remittances," Working Papers DT/2015/23, DIAL (Développement, Institutions et Mondialisation).
    8. Eliana Carranza & Aletheia Donald & Florian Grosset & Supreet Kaur, 2022. "The Social Tax: Redistributive Pressure and Labor Supply," NBER Working Papers 30438, National Bureau of Economic Research, Inc.
    9. Grimm, Michael & Hartwig, Renate & Reitmann, Ann-Kristin & Bocoum, Fadima Yaya, 2021. "Inter-household transfers: An empirical investigation of the income-transfer relationship with novel data from Burkina Faso," World Development, Elsevier, vol. 144(C).
    10. Kaufmann, Marc & Machado, Joël & Verheyden, Bertrand, 2021. "Why Do Migrants Stay Unexpectedly? Misperceptions and Implications for Integration," IZA Discussion Papers 14155, Institute of Labor Economics (IZA).
    11. Rozenn Hotte & Karine Marazyan, 2017. "Demand for Insurance and Within-Kin-Group Marriage: Evidence from a Western African Country," Working Papers 20170005, UMR Développement et Sociétés, Université Paris 1 Panthéon-Sorbonne, Institut de Recherche pour le Développement.
    12. Sangeetha Madhavan & Donatien Beguy & Shelley Clark, 2018. "Measuring extended families over time in informal settlements in Nairobi, Kenya: Retention and data consistency in a two-round survey," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 38(44), pages 1339-1358.

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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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