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Kinship, Incentives and Evolution

  • Ingela Alger

    (Carleton University - Department of Economics)

  • Jörgen Weibull

    (SSE - Department of Economics - Stockholm School of Economics, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)

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 non-monotonic 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 a¤ects economic outcomes.

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Paper provided by HAL in its series Working Papers with number hal-00435431.

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Date of creation: 2009
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Handle: RePEc:hal:wpaper:hal-00435431
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  31. Marcel Fafchamps & Susan Lund, 2000. "Risk-Sharing Networks in Rural Philippines," Economics Series Working Papers 10, University of Oxford, Department of Economics.
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