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Kinship, Incentives and Evolution – revised version: Kinship, Incentives, and Evolution

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Abstract

We analyze how family ties affect incentives, with focus on the strategic interaction between two mutually altruistic siblings. The siblings exert effort to produce output under uncertainty, and they may transfer output to each other. With equally altruistic siblings, their equilibrium effort is nonmonotonic in the common degree of altruism, and it depends on the harshness of the environment. We define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship-relatedness factor. Numerical simulations show how family ties vary with the environment, and how this affects economic outcomes.

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Bibliographic Info

Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 07-13.

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Length: 34 pages
Date of creation: 13 Nov 2007
Date of revision: 17 Sep 2010
Publication status: Published: Revised version: Kinship, Incentives, and Evolution, American Economic Review, Vol. 100, No. 4 (September 2010), pp. 1725–1758
Handle: RePEc:car:carecp:07-13

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  1. Marcel Fafchamps & Susan Lund, 2000. "Risk-Sharing Networks in Rural Philippines," Economics Series Working Papers 10, University of Oxford, Department of Economics.
  2. Lindbeck, Assar & Nyberg, Sten, 2001. "Raising Children to Work Hard: Altruism, Work Norms and Social Insurance," Research Papers in Economics, Stockholm University, Department of Economics 2001:5, Stockholm University, Department of Economics.
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  7. Ingela Alger & Jörgen W. Weibull, 2007. "Family ties, incentives and development: A model of coerced altruism," Carleton Economic Papers, Carleton University, Department of Economics 07-10, Carleton University, Department of Economics, revised 2008.
  8. Ingela Alger & Jörgen Weibull, 2008. "The fetters of the sib: Weber meets Darwin," Working Papers hal-00354241, HAL.
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  12. Eugene A. Hammel & Hans-Peter Kohler, 2001. "On the role of families and kinship networks in pre-industrial agricultural societies: An analysis of the 1698 Slavonian census," Journal of Population Economics, Springer, Springer, vol. 14(1), pages 21-49.
  13. Theodore C. Bergstrom, . "On the Evolution of Altruistic Ethical Rules for Siblings," ELSE working papers, ESRC Centre on Economics Learning and Social Evolution 017, ESRC Centre on Economics Learning and Social Evolution.
  14. Cox, Donald & Hansen, Bruce E. & Jimenez, Emmanuel, 2004. "How responsive are private transfers to income? Evidence from a laissez-faire economy," Journal of Public Economics, Elsevier, Elsevier, vol. 88(9-10), pages 2193-2219, August.
  15. Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, American Economic Association, vol. 81(1), pages 179-90, March.
  16. Maitra, Pushkar & Ray, Ranjan, 2003. "The effect of transfers on household expenditure patterns and poverty in South Africa," Journal of Development Economics, Elsevier, Elsevier, vol. 71(1), pages 23-49, June.
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