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Family ties, incentives and development: A model of coerced altruism

Ingela Alger and Jörgen Weibull

No 07-10, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We analyze the effects of family ties on the incentives for production of effort, where family ties are defined as a mixture of true and coerced altruism between family members. We model families as pairs of siblings. Each sibling exerts effort in order to obtain output under uncertainty. A social norm dictates that a sibling with a high output must share a specified amount of this output with his sibling, if the latter is output is low. Siblings may be truly altruistic towards each other, but not to a larger degree than dictated by the social norm. We compare such informal family insurance with actuarially fair formal insurance.

Keywords: altruism; coerced altruism; family ties; insurance; moral hazard. (search for similar items in EconPapers)
JEL-codes: D02 D13 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2007-10-24, Revised 2008
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Citations: View citations in EconPapers (10)

Published: Revised version in Arguments for a Better World: Essays in Honor of Amartya Sen, Volume II: Society, Institutions, and Development, ed. Kaushik Basu and Ravi Kanburn, Oxford University Press, 2008

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