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Games Parents and Adolescents Play: Risky Behaviour, Parental Reputation and Strategic Transfers

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  • Lingxin Hao
  • V. Joseph Hotz
  • Ginger Z. Jin

Abstract

This article examines parental reputation formation in intra‐familial interactions. In a repeated two‐stage game, children decide whether to drop out of high school or daughters decide whether to have births as teens and parents then decide whether to provide support to their children beyond age 18. Drawing on Milgrom and Roberts (1982) and Kreps and Wilson (1982), we show that, under certain conditions, parents have the incentive to penalise older children for their adolescent risk‐taking behaviour in order to dissuade their younger children from such behaviour when reaching adolescence. We find evidence in favour of this parental reputation model.

Suggested Citation

  • Lingxin Hao & V. Joseph Hotz & Ginger Z. Jin, 2008. "Games Parents and Adolescents Play: Risky Behaviour, Parental Reputation and Strategic Transfers," Economic Journal, Royal Economic Society, vol. 118(528), pages 515-555, April.
    • Handle: RePEc:wly:econjl:v:118:y:2008:i:528:p:515-555
    DOI: 10.1111/j.1468-0297.2008.02132.x
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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