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

Nina Buchmann, Pascaline Dupas and Roberta Ziparo
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Nina Buchmann: Institute of Agricultural Sciences [Zürich] - ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]
Roberta Ziparo: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: We study reputation dynamics within the household in a setting where women regularly receive transfers from their husbands for household purchases. We propose a signaling model in which wives try to maintain a good reputation in the eyes of their husbands to receive high transfers. This leads them to (i) avoid risky purchases (goods with unknown returns) and (ii) knowingly overuse low-return goods to hide bad purchase decisions—we call this the intrahousehold sunk cost effect. We present supportive evidence for the model from a series of experiments with married couples in rural Malawi.

Date: 2025-02-01
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Published in American Economic Review, 2025, 115 (2), pp.525-570. ⟨10.1257/aer.20230393⟩

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Journal Article: The Good Wife? Reputation Dynamics and Financial Decision-Making inside the Household (2025)
Working Paper: The Good Wife? Reputation Dynamics and Financial Decision-Making Inside the Household (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05066954

DOI: 10.1257/aer.20230393

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