Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 682: The Fetters of the Sib: Weber Meets Darwin

Ingela Alger () and Jörgen Weibull ()
Additional contact information
Ingela Alger: Carleton University, Postal: Carleton University, 1125 Colonel By Drive, Ottawa, Ontario, K1S 5B6, Canada
Jörgen Weibull: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: We analyze the effects of family ties on the incentives for productive effort. A family is modelled as a pair of altruistic siblings. Each sibling exerts effort to produce output under uncertainty and siblings may transfer output to each other. We show that altruism has a non-monotonic effect on effort. We study how this effect depends on "climate," the magnitude and volatility of returns to effort. We also analyze the evolutionary robustness of family ties and how this robustness depends on climate. We find that family ties will be stronger in milder climates than in harsher climates.

Keywords: altruism; family ties; moral hazard; evolutionary robustness

JEL-codes: D02; D13

41 pages, November 13, 2007

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