Bequests as a Means of Payment

57 Pages Posted: 27 Apr 2000 Last revised: 26 Jul 2010

See all articles by B. Douglas Bernheim

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Lawrence H. Summers

Harvard University; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: March 1984

Abstract

Although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation, our understanding of bequest motives remains incomplete. We develop a simple model of"exchange-motivated" bequests, in which a testator influences the decisions ofhis beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries' actions. The model generates falsifiable empirical predictions which are inconsistent with other theories of intergenerational transfers. We present econometric and other evidence which strongly suggests that bequests are often used as a means of payment for services rendered by beneficiaries.

Suggested Citation

Bernheim, B. Douglas and Shleifer, Andrei and Summers, Lawrence H., Bequests as a Means of Payment (March 1984). NBER Working Paper No. w1303. Available at SSRN: https://ssrn.com/abstract=227140

B. Douglas Bernheim (Contact Author)

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Andrei Shleifer

Harvard University - Department of Economics ( email )

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Lawrence H. Summers

Harvard University ( email )

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