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Sibling Rivalry and Strategic Parental Transfers

  • Yang-Ming Chang

    ()

    (Department of Economics, Kansas State University)

  • Dennis L. Weisman

    ()

    (Department of Economics, Kansas State University)

This paper develops a noncooperative Nash model in which two siblings compete for their parents' financial transfers. Treating sibling rivalry as a “rent-seeking contest” and using a Tullock-Skaperdas contest success function, we derive the conditions under which more financial resources are transferred to the sibling with lower earnings. We find that parental transfers are compensatory and that the family as an institution serves as an “income equalizer.” Within a sequential game framework, we characterize the endogeneity of parental transfers and link it to parents' income, altruism, and children's supply of merit goods (e.g., parent-child companionship or child services). We show that merit goods are subject to a “moral hazard” problem from the parents' perspective.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 71 (2005)
Issue (Month): 4 (April)
Pages: 821-836

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Handle: RePEc:sej:ancoec:v:71:4:y:2005:p:821-836
Contact details of provider: Web page: http://www.southerneconomic.org/

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  1. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  2. Stefan Hochguertel & Henry Ohlsson, 2000. "Compensatory inter vivos gifts," Economics Working Paper Archive wp_319, Levy Economics Institute.
  3. Kai A. Konrad & Harald Künemund & Kjell Erik Lommerud & Julio R. Robledo, 2002. "Geography of the Family," American Economic Review, American Economic Association, vol. 92(4), pages 981-998, September.
  4. Theodore C. Bergstrom, . "Economics in a Family Way," ELSE working papers 018, ESRC Centre on Economics Learning and Social Evolution.
  5. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
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  7. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S143-62, August.
  8. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-59, October.
  9. Lillard, L-A & Willis, R-J, 1997. "Motives for Intergenerational Transfers. Evidence from Malaysia," Papers 97-04, RAND - Reprint Series.
  10. Lindbeck, Assar & Weibull, Jorgen W, 1988. "Altruism and Time Consistency: The Economics of Fait Accompli," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1165-82, December.
  11. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1, Jan-Jun.
  12. Neil Bruce & Michael Waldman, 1990. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 155-165.
  13. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
  14. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 283-290.
  15. Becker, Gary S, 1976. "Altruism, Egoism, and Genetic Fitness: Economics and Sociobiology," Journal of Economic Literature, American Economic Association, vol. 14(3), pages 817-26, September.
  16. Chami, Ralph, 1998. "Private Income Transfers and Market Incentives," Economica, London School of Economics and Political Science, vol. 65(260), pages 557-80, November.
  17. Cox, Donald & Jakubson, George, 1995. "The connection between public transfers and private interfamily transfers," Journal of Public Economics, Elsevier, vol. 57(1), pages 129-167, May.
  18. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 305-14, May.
  19. Robert Pollak, 2003. "Gary Becker's Contributions to Family and Household Economics," Review of Economics of the Household, Springer, vol. 1(1), pages 111-141, January.
  20. Ted Bergstrom & Carl Bergstrom, 2001. "Does Mother Nature Punish Rotten Kids?," Game Theory and Information 0106004, EconWPA.
  21. Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June.
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