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

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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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. Alger, Ingela & Weibull, Jörgen, 2007. "The Fetters of the Sib: Weber Meets Darwin," SSE/EFI Working Paper Series in Economics and Finance 682, Stockholm School of Economics.
  2. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-66, December.
  3. Azam, Jean-Paul & Gubert, Flore, 2005. "Those in Kayes. The impact of remittances on the recipients in Africa," Economics Papers from University Paris Dauphine 123456789/4571, Paris Dauphine University.
  4. Marco Manacorda & Enrico Moretti, 2006. "Why do Most Italian Youths Live with Their Parents? Intergenerational Transfers and Household Structure," Journal of the European Economic Association, MIT Press, vol. 4(4), pages 800-829, 06.
  5. Donald Cox & Emanuela Galasso & Emmauel Jiminez, 2006. "Private Transfers in a Cross Section of Developing Countries," Working Papers, Center for Retirement Research at Boston College wp2006-1, Center for Retirement Research, revised Jan 2006.
  6. Assar Lindbeck & Sten Nyberg, 2006. "Raising Children to Work Hard: Altruism, Work Norms, and Social Insurance," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1473-1503, November.
  7. Guido Tabellini, 2008. "The Scope of Cooperation: Values and Incentives," CESifo Working Paper Series 2236, CESifo Group Munich.
  8. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer, vol. 24(4), pages 1443-1469, October.
  9. Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, vol. 81(1), pages 179-90, March.
  10. Bruce, Neil & Waldman, Michael, 1990. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 155-65, February.
  11. Bergstrom, Theodore C, 1995. "On the Evolution of Altruistic Ethical Rules for Siblings," American Economic Review, American Economic Association, vol. 85(1), pages 58-81, March.
  12. Marcel Fafchamps & Susan Lund, . "Risk Sharing Networks in Rural Philippines," Working Papers 97014, Stanford University, Department of Economics.
  13. Ingela Alger & Jörgen W. Weibull, 2007. "Family ties, incentives and development: A model of coerced altruism," Carleton Economic Papers 07-10, Carleton University, Department of Economics, revised 2008.
  14. Rajiv Sethi & E. Somanathan, 1999. "Preference Evolution and Reciprocity," Game Theory and Information 9903001, EconWPA, revised 12 Mar 1999.
  15. Cox, Donald & Fafchamps, Marcel, 2008. "Extended Family and Kinship Networks: Economic Insights and Evolutionary Directions," Handbook of Development Economics, Elsevier.
  16. 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, vol. 88(9-10), pages 2193-2219, August.
  17. Maitra, Pushkar & Ray, Ranjan, 2003. "The effect of transfers on household expenditure patterns and poverty in South Africa," Journal of Development Economics, Elsevier, vol. 71(1), pages 23-49, June.
  18. 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, vol. 14(1), pages 21-49.
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