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Intrafamiliar Consumption and Saving under Altruism and Wealth Considerations

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  • Wirl, Franz
  • Feichtinger, Gustav

Abstract

This paper introduces a non-cooperative and dynamic framework of intrafamiliar decisions where the partners obtain utility from own consumption, account for the partner's benefit from consumption ("altruism"), and appreciate wealth. Stationary wealth (and thus stationary consumption) decreases with respect to altruism under cooperation, but increases in the subgame-perfect equilibrium in (linear) Markov-perfect strategies. Moreover, non-cooperation reduces savings and altruism mitigates this effect. However, altruism is an imperfect substitute for commitment, and of course for cooperation, because open-loop strategies, although independent of altruism, result in greater wealth. Copyright 2002 by The London School of Economics and Political Science

Suggested Citation

  • Wirl, Franz & Feichtinger, Gustav, 2002. "Intrafamiliar Consumption and Saving under Altruism and Wealth Considerations," Economica, London School of Economics and Political Science, vol. 69(273), pages 93-111, February.
  • Handle: RePEc:bla:econom:v:69:y:2002:i:273:p:93-111
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    Cited by:

    1. Wirl, Franz, 2010. "Dynamic demand and noncompetitive intertemporal output adjustments," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 220-229, May.
    2. Vital Anderhuba & Dennis A. V. Dittrich & Werner Güth & Nadege Marchandd, "undated". "Interpersonal allocation behavior in a household saving experiment," Papers on Strategic Interaction 2002-02, Max Planck Institute of Economics, Strategic Interaction Group.
    3. Mauro Baranzini, 2005. "Modigliani's life-cycle theory of savings fifty years later," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 109-172.
    4. Herbert Dawid & Engelbert Dockner & Richard Hartl & Josef Haunschmied & Ulrike Leopold-Wildburger & Mikulas Luptacik & Alexander Mehlmann & Alexia Prskawetz & Marion Rauner & Gerhard Sorger & Gernot T, 2010. "Gustav Feichtinger celebrates his 70th birthday," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 18(4), pages 437-451, December.
    5. J. Atsu Amegashie & Marco Runkel, 2012. "The Paradox of Revenge in Conflicts," Journal of Conflict Resolution, Peace Science Society (International), vol. 56(2), pages 313-330, April.
    6. repec:spr:joptap:v:145:y:2010:i:1:d:10.1007_s10957-009-9631-3 is not listed on IDEAS
    7. Franz Wirl, 2009. "Non-cooperative investment in partnerships and their termination," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 17(4), pages 479-494, December.
    8. Amy Farmer & Andrew Horowitz, 2015. "Strategic non-marital cohabitation: theory and empirical implications," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(1), pages 219-237, January.
    9. Katsuhiko Hori & Akihisa Shibata, 2008. "A Dynamic Game Model of Endogenous Growth with Consumption Externalities," Keio/Kyoto Joint Global COE Discussion Paper Series 2008-040, Keio/Kyoto Joint Global COE Program.
    10. Susanne Büchner & Dennis A. V. Dittrich, 2002. "I will survive! -- Gender discrimination in a household saving decisions experiment," Papers on Strategic Interaction 2002-14, Max Planck Institute of Economics, Strategic Interaction Group.
    11. Mauro Baranzini, 2005. "Modigliani's life-cycle theory of savings fifty years later," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 109-172.

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