bank acquisitions and ownership structure theory and evidence abstract in this paper we both theoretically and empirically consider the joint nature of two ownermanager conflict resolution mechanisms insider shareholdings and shareholder concentration we find evidence of a significant entrenchment effect for high low firms moreover bidder returns are found to be positive for high high firms only we utilize a switching of regression regimes model to solve for critical values of and that subdivide the universe of acquiring firms into separate and distinct ownership structure regimes i e that define high vs low levels of or

a model of the origins of basic property rights this paper studies the origins of one of the most basic of property rights namely the right of an individual or an organization to the fruits of its labour my objective is to address the questions of why when and how this property right can emerge and be made secure i develop a model of the strategic interaction between two players in the state of nature which is an environment characterized by the absence of any laws and institutions including property rights and the state my analysis explores in particular the roles of the players fightin g and productive skills on the emergence and security or otherwise of this property right

rule making in community forestry institutions the difference women make abstract forest use rules determine what products are extracted from community governed forests in what quantity by what methods and by whom the nature of rules and the process by which they are formulated e g who participates in formulating them can impinge critically on institutional sustainability given their potential impact on the commitment and incentive to protect and on equity and conservation outcomes this is well recognized in the substantial literature on institutions governing common pool resources cprs it is also well recognized although in relation to other types of institutions such as legislatures and village councils that there can be notable differences in women s and men s policy priorities yet there is surprisingly little existing work on or statistical testing of potential gender differences in rule making in institutions managing natural resources such as forests this paper based on the author s primary data for india and nepal seeks to fill this conceptual and empirical gap it examines why we might expect women to favour different rules from men and statistically tests whether the gender composition of the executive committees ecs the main decision making bodies of community forestry institutions cfis in south asia makes a difference to the strictness of forest use rules this is analyzed both by specifying a strictness index which aggregates rules across products and by examining rules for selected products and both for all sample districts together and for each district separately gender is found to make a significant difference to the rules specified but not always in the expected direction given their substantial and daily dependence on local forests especially for firewood and fodder rural women may normally be expected to veer toward lenient rules of extraction in fact groups with more ec women and especially with all women ecs tend to make stricter rules than other groups in most of the sample districts except one district where they tend to make less strict rules greater strictness is attributable especially to the resource constraint faced by all women groups ie cfis with all women ecs which receive smaller and more degraded forests than groups with men less strict rules among cfis in the exceptional district are attributable especially to the disproportionate presence of landless women on their ecs in other words not simply women s presence in rule making but also their economic class can matter strictness also varies by type of product forest and population characteristics the ec s average age and dominant caste and monitoring constraints the potential implications for equity institutional sustainability and forest conservation are also discussed

economic dynasties with intermissions we consider a model of successive generations with a fixed proportion of selfish and altruistic members in each individual s offspring in contrast with the others selfish members bequeath nothing to their own children we assume that parents cannot recognize their heirs types and that negative bequests are forbidden we study markov perfect equilibria of this multistage game of incomplete information and their implications for wealth distribution

fiscal policy with agents differing in altruism and ability this paper presents an overlapping generations model of growth with individuals differing in productivity and altruism within such a model wealth is entirely held in the steady state by the families with the highest degree of altruism we then look at the macroeconomic and distributive effects of three fiscal policies public debt pay as you go social security and estate taxation under plausible assumption we show that both public debt and social security are neutral a la ricardo but increase inequality we also show that a estate taxation can be pareto worsening even though it can foster income equality

wealth distribution in life cycle economies abstract this paper compares the age wealth distribution produced in life cycle economies to the corresponding distribution in the us economy the idea is to calibrate the model economies to match features of the us earnings distribution and then examine the wealth distribution implications of the model economies the findings are that the calibrated model economies with earnings and lifetime uncertainty can replicate measures of both aggregate wealth and transfer wealth in the us furthermore the model economies produce the us wealth gini and a significant fraction of the wealth inequality within age groups however the model economies produce less than half the fraction of wealth held by the top 1 percent of us households

the distribution of wealth with imperfect altruism abstract in this paper we study the distribution of wealth in an economy with infinitely lived families individual generations of each family may or may not be altruistic this is represented as a preference shock which follows a first order markov process within each family a feature representingimperfect altruism altruistic individuals care about the welfare of their children and are likely to leave bequests selfish ones do not this results in a non trivial distribution of wealth among families at any point in time we study an economy with a risk free linear production technology and show that a stationary distribution of wealth exists this distribution is discrete and approximates the pareto distribution under additional restrictions we also characterize conditions on the production technology which yields perpetual growth with increasing inequality journal of economic literatureclassification numbers d31 d91 e21

measuring the effects of regulation with stock price data this article examines the usefulness of stock returns in measuring the effects of regulation when the dates on which market expectations change are not known and standard sources e g the wall street journal are used to choose announcement dates twenty major changes in regulatory constraint since 1887 are considered tests using either monthly or daily data are found to have surprisingly little ability to detect the effects of regulation the evidence shows that formal regulatory announcements are generally anticipated in cases where it is unclear when expectations change

determinacy of equilibrium in stationary economies with both finite and infinite lived consumers abstract we consider the determinacy of perfect foresight equilibrium near steady state equilibria of stationary infinite horizon economies the work of t j kehoe and d k levine econometrica 53 1985 433 453 is generalized by the inclusion of both infinite lived agents and overlapping generations of finite lived agents and the inclusion of production and non depreciating pure rents we show that indeterminacy is possible in robust examples and that the dimension of the indeterminacy can be as large as the number of goods per period we also discuss extreme cases in which determinacy is guaranteed

does schooling cause growth a number of economists find that growth and schooling are highly correlated across countries a model is examined in which the ability to build on the human capital of one s elders plays an important role in linking growth to schooling the model is calibrated to quantify the strength of the effect of schooling on growth by using evidence from the labor literature on mincerian returns to education the upshot is that the impact of schooling on growth explains less than one third of the empirical cross country relationship the ability of reverse causality to explain this empirical relationship is also investigated

market evidence on the effective maturity of bank assets and liabilities the recent years increase in interest rate volatility has intensified concern over the exposure of commercial banks to interest rate or funding risk since the effect of interest rate changes on the equity value of a bank depends on the maturity or duration of the bank s assets and liabilities assessing an individual bank s interest rate risk exposure requires information about the maturity composition of its portfolio it is difficult however to assess a bank s risk exposure from balance sheet data because several important asset and liability items have theoretically ambiguous effective maturities in a frictionless market a security s effective maturity will equal its stated maturity or time to repricing with market imperfections e g depositors transaction or information costs however the equilibrium cost of some deposit items may respond sluggishly or incompletely to market rate changes see hester and pierce 1975 or flannery 1982 such liabilities market values discounted at market rates would therefore fluctuate with the level of interest rates these liabilities are sometimes called core deposits which manifest sticky responses to market rate changes we define an asset or liability s effective maturity as the maturity of a fixed rate perfectly elastically supplied security with the same market value elasticity as the bank balance sheet item under consideration naturally a balance sheet item s effective maturity is the relevant determinant of its contribution to the bank s overall interest rate risk sensitivity

fiscal policy in a growth model with both altruistic and nonaltruistic agents this paper examines the long run behavior of an overlapping generations model with a population consisting of altruistic and nonaltruistic agents it also studies the effect of fiscal policy on aggregate capital accumulation and on the welfare of both types of agents it shows that an increase in the relative number of nonaltruists is pareto improving in the steady state it also shows that the introduction of public debt or unfunded social security has no effect on the longrun equilibrium but implies a transfer of resources from the nonaltruistic to the altruistic agents finally it indicates that inheritance taxation hurts not only the altruists but also the nonaltruists

inherited trust and growth this paper develops a new method to uncover the causal effect of trust on economic growth by focusing on the inherited component of trust and its time variation we show that inherited trust of descendants of us immigrants is sig nificantly influenced by the country of origin and the timing of arrival of their forebears we thus use the inherited trust of descendants of us immigrants as a time varying measure of inherited trust in their country of origin this strategy allows to identify the sizeable causal impact of inherited trust on worldwide growth during the twentieth century by controlling for country fixed effects jel n11 n12 n31 n32 o47 z13

long run equilibria with borrowing constraints and altruism this paper adapts a nonstochastic overlapping generations model to include liquidity constraints and intergenerational altruism existing work indicates the importance of both but often considers them separately this paper studies their interactions first it shows that they tend to conflict the model only admits stationary equilibria with dynastic wealth accumulation but no binding liquidity constraints or wity binding constraints but no dynastic accumulation second it examines the latter type of equilibrium closely if liquidity constraints bind quantitative examples imply that consequent utility losses may be small and that economywide wealth accumulation tends to be unrealistically low

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

pay as you go social security and the distribution of altruistic transfers this paper studies the impact of an unfunded social security system on the distribution of altruistic transfers in a framework where savings are due to both life cycle and random altruistic motivations we show that the effect of social security on the distribution of these transfers depends crucially on the strength of the bequest motive in explaining savings behaviour we measure this strength by the expected weight that individuals attach to the utility of future generations on the one hand if the bequest motive is strong then an increase in the social security tax raises the bequests left by altruistic parents on the other hand when the importance of altruism in motivating savings is sufficiently low the increase in the social security tax could result in a reduction of the bequests left by altruistic parents under some conditions on the attitude of individuals toward risk and on the relative returns associated with private saving and social security some implications concerning the transitional effects of introducing an unfunded social security scheme are also discussed

random earnings differences lifetime liquidity constraints and altruistic intergenerational transfers abstract this paper develops a model of private savings behavior in which households care about their descendants cannot have negative net worth and have lifetime earnings depending on random draws from an exogenous distribution of abilities the elements interact very lucky parents are likely to leave large estates constrained children are unusually likely to receive intergenerational transfers the paper proves the existence of a stationary cross sectional distribution of wealth endogenously determines where liquidity constraints will bind and shows that the long term interest rate must be such that ricardian neutrality fails its last section generates several illustrative numerical simulations

how inheriting affects bequest plans we present and test the idea that bequest planning is linked with the experience of inheriting we consider a family tradition of bequeathing as a channel through which the intention to bequeath is moulded by and is positively correlated with the experience of inheriting using data from the survey on health ageing and retirement in europe share we find that the experience of inheriting enhances the intention to bequeath independently of the positive impact of wealth we also find that the expectation of inheriting has a positive impact on the intention to bequeath controlling for the expected increase in wealth on account of future inheritances

fiscal policy with impure intergenerational altruism recent work demonstrates that dynastic assumptions guarantee the irrelevance of redistributional policies distortionary taxes and prices the neutrality of fiscal policy ricardian equivalence is only the tip of the iceberg this paper investigates the possibility of reinstating approximate ricardian equivalence by introducing a small amount of friction in intergenerational links if ricardian equivalence depends upon significantly shorter chains of links than do these stronger neutrality results then friction may dissipate the effects that generate strong neutrality without significantly affecting the ricardian result however models with friction have other untenable implications and thus the theoretical case for ricardian equivalence remains tenuous copyright 1991 by the econometric society

dynasties and destiny on the roles of altruism and impatience in the evolution of consumption and bequests abstract we study the joint role of altruism and impatience and the impact of evolution in the formation of long term time preferences and in the determination of optimal consumption and optimal bequests we show how the consumption paths of dynasties relate to altruism and to impatience and we reason that long lived dynasties will be characterized by a higher degree of altruism and a lower degree of impatience than short lived dynasties

wealth varying intertemporal elasticities of substitution evidence from panel and aggregate data abstract this paper constructs and estimates a model of consumer preferences in which the intertemporal elasticity of substitution ies of consumption expenditure rises with the level of wealth the purpose of this paper is to measure the effect that systematic variation in the ies of poor and rich consumers has on the ies of aggregate consumption expenditure we find economically significant differences in the ies of poor and rich consumers in indian panel data on the consumption of individual households we also find economically significant differences in the ies measured in aggregate time series data for the u s and india

the distribution of wealth and welfare in the presence of incomplete annuity markets this paper examines the implications of the absence of complete annuity markets on the distribution of wealth and welfare of agents whose saving decisions are obtained under uncertainty regarding the length of their life the absence of annuities is shown to yield a unique nondegenerate intragenerational distribution of wealth which is fully characterized this characterization is then used to evaluate the pareto desirability of an annuity system alternative welfare criteria that can be used when the proposed change has differential impacts on the initial state of subsequent generations are considered

the wealth effect of merger activity and the objective functions of merging firms abstract this paper studies the net effects of the long run sequence of events leading to merger and of merger per se on shareholder wealth the appropriate measure of the wealth effect is shown to be the abnormal dollar return cumulated over time using this measure the long run wealth effect of the event sequence culminating in merger is significantly negative for acquiring firms for acquired firms the effect is negative but not significant the immediate impact of merger per se is positive and highly significant for acquired firms but larger in absolute value and negative for acquiring firms the evidence also reveals that measured abnormal rates of return to acquiring firms are sensitive to a slight variation in model specification and dependent on firm size with smaller firms earning significantly negative post merger returns

a note on deposit rate deregulation super nows and bank security returns abstract this paper empirically investigates the effects on the weekly returns of almost 100 banking organizations of the december 1982 authorization of super nows examination of excess returns around the announcement date suggests that the announcement of the super nows had a statistically significant and negative effect and that the impact differed significantly by type of bank while returns for money center banks were generally unaffected excess returns for regional retail banks were highly significant

co existence of a representative agent type equilibrium with a non representative agent type equilibrium we provide an example of an overlapping generations model with bequest motives and a non negativity constraint on bequests which has at least two equilibria in one equilibrium the bequest motive is operative at all dates and the equilibrium is formally equivalent to that of a representative infinitely lived agent model in the other equilibrium the bequest motive is never operative and the equilibrium is formally equivalent to that of an overlapping generations model without a bequest motive the example has obvious implications for the ricardian equivalence doctrine and the neutrality of lump sum tax transfers across generations

the differential impact of two significant court decisions concerning banking consolidation abstract two 1981 court rulings effectively removed the possibility that federal regulatory agencies could apply the theory of probable future competition to block future bank mergers and takeovers results show that the impact of this regulatory change which occured without any contemporaneous public press coverage led to a significant decline in the wealth of shareholders of banks that had been active acquirers these findings are consistent with mueller s size maximization and roll s hubris hypothese

subjective random discounting and intertemporal choice this chapter provides an axiomatic foundation for a particular type of preference shock model called the random discounting representation where a decision maker believes that her discount factors change randomly over time for this purpose we formulate an infinite horizon extension of dekel lipman and rustichini econometrica 69 891 934 2001 and identify the behavior that reduces all subjective uncertainties to those about future discount factors we also show uniqueness of subjective belief about discount factors moreover a behavioral comparison about preference for flexibility characterizes the condition that one s subjective belief second order stochastically dominates the other finally the resulting model is applied to a consumption savings problem

cultural constraints on innovation based growth to what extent does the cultural composition of a society impose a constraint on its long run growth potential we study this question in the context of an innovation based model of growth where cultural attitudes are endogenously transmitted from one generation to the next focusing on attitudes regarding patience we analyze the two way interaction between economic growth and the intergenerational transmission of patience exploiting this interaction we compare the long run growth performance of a culturally heterogeneous society where patience is initially underrepresented in the population with a culturally homogeneous society where all agents are perfectly patient our main result is that in the absence of any intrinsic preferences of patient parents to transmit their attitudes to their children the development paths of the two societies are bound to diverge with the culturally heterogeneous society experiencing lower growth rates yet if patient parents ceteris paribus prefer their children to be patient like them we show that the two societies can in the long run grow at the same rate jel d91 e24 o30 o40 z10

mothers and sons preference formation and female labor force dynamics this paper argues that the growing presence of a new type of man one brought up in a family in which the mother worked has been a significant factor in the increase in female labor force participation over time we present cross sectional evidence showing that the wives of men whose mothers worked are themselves significantly more likely to work we use variation in the importance of world war ii as a shock to women s labor force participation as proxied by variation in the male draft rate across u s states to provide evidence in support of the intergenerational consequences of our propagation mechanism

equilibrium existence in an overlapping generations model with altruistic preferences abstract we prove the existence of a competitive equilibrium in an overlapping generations model with altruistic preferences and nonnegative bequests in equilibrium some sequences of agents of successive generations may be continually linked by positive bequests and act as infinitely lived agents other sequences of agents may not be so linked and therefore behave as sequences of finite lived agents thus this paper adds to the literature on competitive equilibrium in dynamic models by endogenising the mix of finite and infinitely lived agents we also discuss optimality and provide some examples which exhibit interesting equilibria

an analysis of divestiture effects resulting from deregulation capital market data were used to examine the divestiture effects pertaining to deregulation the dropping of antitrust charges and the reversing of the co insurance effect associated with the recent breakup of at t the empirical results of the study indicate that significant economic events took place during the breakup process which led to transfers of wealth from various parties to the securityholders of at t the results also indicate that the buffering effect of regulation was reduced as at t went through the total deregulation process this is in accordance with peltzman s prediction the focus of this research is an involuntary breakup split up or total divestiture of a major corporation in the economy at t the breakup of at t occurring on january 1 1984 provides an excellent opportunity to study both merger and acquisition theory in reverse as well as to analyze the impact of significant deregulation on a large corporation in the economy while several firms have involuntarily divested themselves of a division or subsidiary over the recent past the size of the divestiture is usually not significant enough to be observed in the returns to bondholders stockholders and third parties the recent large scale breakup of at t by court order occurred over a fairly long time period approximately two years which makes it possible to examine the effects of certain specific subevents with respect to the wealth transfer among the claimants of the firm it is also possible to draw some conclusions about the effects of deregulation on corporate investors in general by examining the returns behavior over the extended split up period capital market data were used to examine the divestiture effects pertaining to the breakup of at t many theoretical and empirical studies have analyzed the impact of mergers and acquisitions on the wealth of corporate investors on the theoretical side single period cash flow models preserving limited liability have been developed by baron 2 chen 7 higgins and schall 11 and brennan 5 on the empirical side work by mandelker 15 langetieg 14 and asquith 1 has investigated the effect of mergers on target and bidder stockholder returns the results of these studies warrant the following general conclusions a some of the wealth of premerger stockholders may be transferred to the bondholders of southern methodist university and the university of texas at dallas respectively we would

precautionary saving and accidental bequests this paper presents a simple general equilibrium model of precautionary saving and accidental bequests this model is used to analyze the implications of individual lifetime uncertainty for aggregate consumption and capital accumulation a precautionary demand for saving arises because an individual consumer does not know in advance the date at which he will die and he wants to avoid low levels of consumption in the event that he lives longer than expected an implication of this precautionary saving is that when death does occur the consumer is generally holding some wealth which is then passed on to his heirs in the form of an accidental bequest even if all consumers have the same ex ante mortality probabilities there will be some intracohort variation in the date of death consequently there will be a nondegenerate distribution of bequests left by consumers in a cohort this nondegenerate distribution of bequests left by one generation induces variation in the distributions of wealth consumption and bequests of subsequent generations the importance of bequests in aggregate saving has been established by laurence kotlikoff and lawrence summers 1981 who reported that 80 percent of u s household wealth is inherited wealth one interpretation of this finding is that the simple life cycle model without bequest motives is an inadequate description of saving behavior in the united states but the model i present demonstrates that accidental bequests by selfish consumers can account for a potentially sizeable fraction of aggregate wealth although some part of bequests especially by the wealthy undoubtedly results from an explicit bequest motive accidental bequests also play a role in the intergenerational transfer of wealth as well as in the intragenerational variation in wealth in order to focus on the role of accidental bequests i purposely exclude a bequest motive from the specification of the utility function the effects of lifetime uncertainty on individual consumption behavior were first examined formally in a seminal paper by menachem yaari 1965 yaari s model provided the basic framework for virtually all subsequent work on uncertain lifetimes including well known papers by nils hakansson 1969 stanley fischer 1973 robert barro and james friedman 1977 david levhari and leonard mirman 1977 and kotlikoff and avia spivak 1981 however all of these papers focused on the consumption decision of an individual and ignored the effect of accidental bequests on the behavior of the recipients of these accidental bequests 2 as will be shown at various points in this paper changes in the economic environment can have effects on aggregate behavior which differ sharply from the effects on individual behavior because of the endogenous adjustment of bequests the effects of department of economics harvard university cambridge ma 02138 this paper is a revised version of bequests and social security with uncertain lifetimes nber working paper no 1372 june 1984 i thank olivier blanchard john burbidge christopher cavanagh robert clower stanley fischer benjamin friedman elhanan helpman mervyn king nobuhiro kiyotaki laurence kotlikoff robert mcdonald james pesando julio rotemberg lawrence summers lars svensson mark watson and jeffrey wolcowitz for valuable conversations and correspondence i also thank the participants in seminars at boston university columbia university cornell university federal reserve board harvard university university of iowa mit university of minnesota university of montreal national bureau of economic research north carolina state university the wharton school and yale university and two anonymous referees for their helpful comments i also thank the national science foundation for financial support 1 in the presence of perfect annuity and life insurance markets there may or may not be bequests depending on the presence or absence of a bequest motive but there would be no accidental bequests 2 kotlikoff and spivak focus on the role of the family in providing an incomplete annuities market but stop short of a full scale overlapping generations model in which the distribution of bequests is determined endogenously

estimating individual discount rates in denmark a field experiment we estimate individual discount rates with respect to time streams of money using controlled laboratory experiments these discount rates are elicited by means of field experiments involving real monetary rewards the experiments were carried out across denmark using a representative sample of 268 people between 19 and 75 years of age individual discount rates are estimated for various households differentiated by socio demographic characteristics such as income and age our conclusions are that discount rates are constant over the 12 month to 3 year horizons used in these experiments and that discount rates vary substantially with respect to several socio demographic variables hence we conclude that it would be reasonable to assume constant discount rates for specific household types but not the same rates across all households

unemployment insurance and cultural transmission theory and application to european unemployment this paper emphasizes the two way causality between the provision of unemployment insurance and the cultural transmission of work ethic values affect the size of the moral hazard problem and hence the policy to be implemented conversely when parents rationally choose how much effort to exert to raise their children to work hard they form expectations on the policy that will be implemented by the next generation in this context we show that the different cultural traits are complementary and that there is some cultural heterogeneity in all steady state equilibria the model could generate a lag between the introduction of unemployment insurance and a deterioration of the work ethic relying on a calibration we argue that it can account for a substantial fraction of the history of european unemployment since world war ii as our explanation is compatible with the co existence of generous unemployment insurance and low unemployment in the 1950s and 1960s it could be seen as an alternative to the dominant story that relies on the occurrence of large shocks since the 1970s supportive empirical evidence is provided

the wealth effects of interstate branching abstract this paper examines the wealth effects of a decision by the office of thrift supervision ots to permit interstate branching for federally chartered savings and loan associations slas an event study of key ots announcements in 1991 and 1992 is conducted based on samples of 38 federally chartered slas and 88 commercial banks large slas and commercial banks generally experienced significant positive wealth effects but little or no reaction was found for smaller depository institutions these findings provide early evidence that interstate branching powers for depository institutions under the riegle neal interstate banking and branching efficiency act of 1994 will tend to benefit large institutions accelerating the trend toward consolidation though without necessarily compromising the viability of smaller institutions

malthusian selection of preferences the authors study natural selection of preferences using a golden age model with endogenous population in equilibrium all agents have preferences with maximum biological fitness given resource constraints and total population is the maximum the environment can sustain naturally selected agents follow the golden rule acting as if they maximize the undiscounted sum of per capita felicities of current and future generations selected preferences and hence work saving consumption and population density vary predictably with environmental differences copyright 1990 by american economic association

an analysis of intra industry differences in the effect of regulation the case of deposit rate ceilings abstract this study examines the impact of deposit rate ceiling changes on the market value of commercial banks and stock savings and loan associations statistically significant increases in market value are found on announcement of the removal of ceilings on large denomination certificates of deposit in contrast retail commercial banks and savings and loans experienced declines in value on announcement of the elimination or relaxation of deposit rate ceilings on small denomination consumer accounts in addition for all events analyzed significant differences were found in the effect of ceiling changes on the market value of wholesale and retail commercial banks

love thy children abstract this paper proves that barro s 1974 debt neutrality proposition whose relevance hinges in an economy with bequest motives on bequests being operative in the economy without public debt is not applicable to a wide class of overlapping generation economies those with a weak bequest motive in particular it is shown that the bequest motive is always too weak and public debt therefore non neutral when non physical assets have a well defined function reducing oversavings in the corresponding economy without bequest motive i e when the non altruistic economy is dynamically inefficient

the less you discount the more it shows you really care interpersonal discounting in households abstract household members make monetary tradeoffs across time classical economics treats these decisions as if one rational individual makes them this assumption masks important other regarding concerns between spouses we designed an artefactual field experiment and collected data from 94 pairs of cohabiting couples to capture the complex nature of intra household time preferences estimation results show that 1 the interpersonal discount rate the rate used to tradeoff intertemporal payoffs between one s own payoff and the spouse s payoff is significantly different from the individual discount rate and 2 the interpersonal discount rate may provide an alternative way for people to express their other regarding preferences towards their spouses