Optimal Timing in Rotten Kid Families

24 Pages Posted: 2 Mar 2017

See all articles by João Ricardo Faria

João Ricardo Faria

Florida Atlantic University

Emilson Delfino Silva

University of Alberta - Department of Marketing, Business Economics & Law

Date Written: February 14, 2017

Abstract

In a family context with endogenous timing, multiple public goods and alternative parental instruments, we show that the optimal timing for the sequential-action game played by rotten kids and a parent depends crucially on whether the kids are homogeneous or heterogeneous. For homogeneous kids, the rotten kid theorem holds irrespective of the parental policy instrument, implying that it is optimal to let the kids to be action leaders. If the kids are heterogeneous, however, parental leadership yields a first best outcome and, hence, it is optimal whenever the kids are economically dependent and agree on the tradeoff between public goods.

Keywords: rotten kids, public goods, endogenous timing, heterogeneous preferences, economically dependent

JEL Classification: D130, D610, D640, D780, H410

Suggested Citation

Faria, Joao Ricardo and Delfino Silva, Emilson, Optimal Timing in Rotten Kid Families (February 14, 2017). CESifo Working Paper Series No. 6333. Available at SSRN: https://ssrn.com/abstract=2925761

Joao Ricardo Faria

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Emilson Delfino Silva (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

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