The Strategic Bequest Motive
Although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation, our under standing of bequest motives remains incomplete. The authors develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries' actions. The model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers. The authors present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries. Copyright 1986 by University of Chicago Press.
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