Bequests as Signals: An Explanation for the Equal Division Puzzle

B. Douglas Bernheim and Sergei Severinov

No 7791, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the United States, more than two-thirds of decedents with multichild families divide their estates exactly equally among their children. In contrast, intra vivos gifts 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.

JEL-codes: D10 H31 (search for similar items in EconPapers)
Date: 2000-07
Note: AG PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Bernheim, B. Douglas and Sergei Severinov. "Bequests As Signals: An Explanation For The Equal Division Puzzle," Journal of Political Economy, 2003, v111(4,Aug), 733-764.

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