Bequests as Signals: An Explanation for the Equal Division Puzzle

74 Pages Posted: 19 Jul 2000 Last revised: 1 Apr 2001

See all articles by B. Douglas Bernheim

B. Douglas Bernheim

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

Sergei Severinov

Duke University, Fuqua School of Business-Economics Group

Date Written: July 2000

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.

Suggested Citation

Bernheim, B. Douglas and Severinov, Sergei, Bequests as Signals: An Explanation for the Equal Division Puzzle (July 2000). NBER Working Paper No. w7791. Available at SSRN: https://ssrn.com/abstract=236658

B. Douglas Bernheim (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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National Bureau of Economic Research (NBER)

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Sergei Severinov

Duke University, Fuqua School of Business-Economics Group ( email )

Box 90097
Durham, NC 27708-0097
United States
919-660-7926 (Phone)
919-660-7971 (Fax)

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