Asymmetry of Information within Family Networks

56 Pages Posted: 25 Sep 2014

See all articles by Joachim De Weerdt

Joachim De Weerdt

University of Antwerp - Institute of Development Policy and Management; KU Leuven - Centre for Institutions and Economic Performance (LICOS)

Garance Genicot

Georgetown University - Department of Economics

Alice Mesnard

City University London

Multiple version iconThere are 2 versions of this paper

Date Written: September 2014

Abstract

This paper studies asymmetry of information and transfers within a unique data set of 712 extended family networks from Tanzania. Using cross-reports on asset holdings, we construct measures of misperception of income among all pairs of households belonging to the same network. We show that there is significant asymmetry of information and no evidence of major systematic over-evaluation or under-evaluation of income in our data, although there is a slight over-evaluation on the part of migrants regarding non-migrants. We develop a static model of asymmetric information that contrasts altruism, pressure and exchange as motives to transfer. The model makes predictions about the correlations between misperceptions and transfers under these competing explanations. Testing these predictions in the data gives support to the model of transfers under pressure or an exchange motive with the recipient holding all the bargaining power.

Keywords: Altruism, Asymmetric Information, Exchange, Family Networks, Pressure, Transfers

JEL Classification: F22, F24

Suggested Citation

De Weerdt, Joachim and Genicot, Garance and Mesnard, Alice, Asymmetry of Information within Family Networks (September 2014). Available at SSRN: https://ssrn.com/abstract=2501608

Joachim De Weerdt (Contact Author)

University of Antwerp - Institute of Development Policy and Management ( email )

City campus building S
Lange Sint Annastraat 7
Antwerp, 2000
Belgium

KU Leuven - Centre for Institutions and Economic Performance (LICOS) ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium

Garance Genicot

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-7144 (Phone)
202-687-6102 (Fax)

HOME PAGE: http://www.georgetown.edu/faculty/gg58

Alice Mesnard

City University London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

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