Publication: Altruistically motivated transfers under uncertainty
Loading...
Identifiers
Publication date
2014-11-01
Defense date
Authors
Advisors
Tutors
Journal Title
Journal ISSN
Volume Title
Publisher
John Wiley & Sons, Inc.
Impact
Export
Abstract
How do families behave dynamically? We provide a framework for studying economic problems in which family behavior is essential. Our key innovation is the inclusion of imperfectly altruistic agents in an otherwise standard consumption-savings problem with exogenous income risk. This gives rise to altruistic transfers and strategic behavior in the consumption&-savings decision. We study the Markov-perfect equilibrium that arises from the limit of equilibria in a sequence of finite games. The equilibrium's transfer patterns are empirically plausible. Furthermore, agents overconsume relative to the social optimum. In contrast to two-period models, both the richer and the poorer players overconsume long before transfers actually occur. The poorer agent also faces incentives to engage in excessive risk-taking because losses from a gamble are absorbed by both while gains are enjoyed alone.
Description
Keywords
Altruism, Inter vivos transfers, Consumption-savings decision, Differential games, C73, D1, D64, E21
Bibliographic citation
Barczyk, D., & Kredler, M. (2014). Altruistically motivated transfers under uncertainty. Quantitative Economics, 5, pp. 705–749