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American Economic Review: Vol. 100 No. 4 (September 2010)

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Kinship, Incentives, and Evolution

Article Citation

Alger, Ingela, and Jörgen W. Weibull. 2010. "Kinship, Incentives, and Evolution." American Economic Review, 100(4): 1725-58.

DOI: 10.1257/aer.100.4.1725

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)

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Authors

Alger, Ingela (Carleton U)
Weibull, Jörgen W. (Stockholm School of Economics)

JEL Classifications

D13: Household Production and Intrahousehold Allocation
D64: Altruism
J12: Marriage; Marital Dissolution; Family Structure; Domestic Abuse
Z13: Economic Sociology; Economic Anthropology; Social and Economic Stratification


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