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The Good Wife? Reputation Dynamics and Financial Decision-Making Inside the Household

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  • Nina Buchmann
  • Pascaline Dupas
  • Roberta Ziparo

Abstract

We study the dynamic relationship between women's intra-household reputation and investment decisions. We consider household investments delegated to the wife in settings where wives perceived to be savvy investors by their husbands are entrusted with a larger budget share. We show, first theoretically, then empirically in a series of experiments in Malawi, that a signaling game can result: to maintain control over a larger budget share, wives (a) under-invest in novel goods with unknown but high expected returns; and (b) knowingly over-use low-return goods in order to hide bad purchase decisions---we call this the intra-household sunk cost effect. These dynamics have important implications for women's well-being as well as for the design of poverty alleviation programs.

Suggested Citation

  • Nina Buchmann & Pascaline Dupas & Roberta Ziparo, 2023. "The Good Wife? Reputation Dynamics and Financial Decision-Making Inside the Household," NBER Working Papers 31076, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31076
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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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