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

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

Abstract

This paper examines reputation formation in intra-familial interactions. We consider parental reputation in a repeated two-stage game in which adolescents decide whether to give a teen birth or drop out of high school, and given adolescent decisions, the parent decides whether to house and support his children beyond age 18. Drawing on the work of Milgrom and Roberts (1982) and Kreps and Wilson (1982), we show that the parent has, under certain conditions, the incentive to penalize older children for their teenage risky behaviors in order to dissuade the younger children from the same risky behaviors. The model generates two empirical implications: the likelihood of teen risky behaviors and parental transfers to a child who engaged in teen risky behaviors will decrease with the number of remaining children at risk. We test these two implications, using data from the National Longitudinal Survey of Youth, 1979 Cohort (NLSY79). Exploiting the availability of repeated observations on individual respondents and of observations on multiple siblings, we find evidence in favor of both predictions.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11872.

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Date of creation: Dec 2005
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Publication status: published as Hao, Lingxin, V. Joseph Hotz, and Ginger Zhe Jin. “Games Parents and Adolescents Play: Risky Behaviors, Parental Reputation, and Strategic Transfers.” Economic Journal 118, 528 (April 2008): 515–555.
Handle: RePEc:nbr:nberwo:11872

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Cited by:
  1. Deborah Cobb-Clark & Tue Gørgens, 2012. "Parents' Economic Support of Young-Adult Children: Do Socioeconomic Circumstances Matter?," Melbourne Institute Working Paper Series wp2012n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Deborah Cobb-Clark & David Ribar, 2012. "Financial stress, family relationships, and Australian youths’ transitions from home and school," Review of Economics of the Household, Springer, vol. 10(4), pages 469-490, December.
  3. Anyck Dauphin & Abdel-Rahmen El Lahga & Bernard Fortin & Guy Lacroix, 2010. "Are Children Decision-Makers Within the Household?," CIRANO Working Papers 2010s-17, CIRANO.
  4. Deborah Cobb-Clark & Tue Gørgens, 2014. "Parents’ economic support of young-adult children: do socioeconomic circumstances matter?," Journal of Population Economics, Springer, vol. 27(2), pages 447-471, April.
  5. Deborah A. Cobb-Clark & David C. Ribar, 2009. "Financial Stress, Family Conflict, and Youths’ Successful Transition to Adult Roles," CEPR Discussion Papers 627, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  6. Matthias Doepke & Fabrizio Zilibotti, 2014. "Parenting with Style: Altruism and Paternalism in Intergenerational Preference Transmission," NBER Working Papers 20214, National Bureau of Economic Research, Inc.
  7. Kohei Kubota & Akiko Kamesaka & Masao Ogaki & Fumio Ohtake, 2013. "Cultures, Worldviews, and Intergenerational Altruism," ERSA conference papers ersa13p758, European Regional Science Association.
  8. Masao Ogaki & Fumio Ohtake & Akiko Kamesaka & Kohei Kubota, 2013. "Cultures, Worldviews, and Intergenerational Altruism," 2013 Meeting Papers 690, Society for Economic Dynamics.

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