Bequests as Signals: An Explanation for the Equal Division Puzzle

B. Douglas Bernheim and Sergei Severinov

Journal of Political Economy, 2003, vol. 111, issue 4, 733-764

Abstract: In the United States, more than two-thirds of decedents with multichild families divide their estates exactly equally among their children. In contrast, gifts given before death are usually unequal. These findings challenge the validity of existing theories regarding the determination of intergenerational transfers. In this paper, we develop a theory that accounts for this puzzle based on the notion that the division of bequests provides a signal about a parent's altruistic preferences. The theory can also explain the norm of unigeniture, which prevails in other societies.

Date: 2003
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Working Paper: Bequests as Signals: An Explanation for the Equal Division Puzzle (2000)
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