Kinship, Incentives, and Evolution

Ingela Alger and Jörgen Weibull

American Economic Review, 2010, vol. 100, issue 4, 1725-58

Abstract: 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 nonmonotonic 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 affects economic outcomes. (JEL D13, D64, J12, Z13)

JEL-codes: D13 D64 J12 Z13 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/aer.100.4.1725
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Citations: View citations in EconPapers (110)

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