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Asymmetry of Information within Family Networks

Author

Listed:
  • Joachim De Weerdt

    () (EDI, Tanzania)

  • Garance Genicot

    () (Georgetown University)

  • Alice Mesnard

    () (City University, London and Institute for Fiscal Studies.)

Abstract

This paper studies asymmetry of information and transfers within a unique data set of 712 extended family networks from Tanzania. Using cross-reports on asset holdings, we construct measures of misperception of income among all pairs of households belonging to the same network. We show that there is significant asymmetry of information and no evidence of major systematic over-evaluation or under-evaluation of income in our data, although there is a slight over-evaluation on the part of migrants regarding non-migrants. We develop a static model of asymmetric information that contrasts altruism, pressure and exchange as motives to transfer. The model makes predictions about the correlations between misperceptions and transfers under these competing explanations.Testing these predictions in the data gives support to the model of transfers under pressure or an exchange motive with the recipient holding all the bargaining power.

Suggested Citation

  • Joachim De Weerdt & Garance Genicot & Alice Mesnard, 2014. "Asymmetry of Information within Family Networks," CReAM Discussion Paper Series 1433, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:1433
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    References listed on IDEAS

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    4. Ganesh Seshan & Robertas Zubrickas, 2017. "Asymmetric Information about Migrant Earnings and Remittance Flows," World Bank Economic Review, World Bank Group, vol. 31(1), pages 24-43.
    5. Orazio P. Attanasio & Nicola Pavoni, 2011. "Risk Sharing in Private Information Models With Asset Accumulation: Explaining the Excess Smoothness of Consumption," Econometrica, Econometric Society, vol. 79(4), pages 1027-1068, July.
    6. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.),Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 17, pages 1135-1198, Elsevier.
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    10. Chort, Isabelle & Gubert, Flore & Senne, Jean-Noël, 2012. "Migrant networks as a basis for social control: Remittance incentives among Senegalese in France and Italy," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 858-874.
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    Citations

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    Cited by:

    1. Brian Dillon & Joachim De Weerdt & Ted O'Donoghue, 2016. "Paying more for less: why don't households in Tanzania take advantage of bulk discounts?," Working Papers of LICOS - Centre for Institutions and Economic Performance 571688, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
    2. Ambler, Kate, 2015. "Don't tell on me: Experimental evidence of asymmetric information in transnational households," Journal of Development Economics, Elsevier, vol. 113(C), pages 52-69.
    3. Orazio Attanasio & Sonya Krutikova, 2020. "Consumption Insurance in Networks with Asymmetric Information," NBER Working Papers 27290, National Bureau of Economic Research, Inc.
    4. Genicot, Garance, 2016. "Two-sided altruism and signaling," Economics Letters, Elsevier, vol. 145(C), pages 92-97.
    5. De Arcangelis, Giuseppe & Joxhe, Majlinda & McKenzie, David & Tiongson, Erwin & Yang, Dean, 2015. "Directing remittances to education with soft and hard commitments: Evidence from a lab-in-the-field experiment and new product take-up among Filipino migrants in Rome," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 197-208.
    6. Sangeetha Madhavan & Donatien Beguy & Shelley Clark, 2018. "Measuring extended families over time in informal settlements in Nairobi, Kenya: Retention and data consistency in a two-round survey," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 38(44), pages 1339-1358.

    More about this item

    Keywords

    Asymmetric Information; Transfers; Pressure; Exchange; Altruism.;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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