Asymmetry of Information within Family Networks

55 Pages Posted: 6 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

University of Toulouse 1 - Advanced Research in Quantitative Applied Development Economics (ARQADE); Centre for Economic Policy Research (CEPR)

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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: asymmetric information, transfers, pressure, exchange, altruism

JEL Classification: O12, O15, D12

Suggested Citation

De Weerdt, Joachim and Genicot, Garance and Mesnard, Alice, Asymmetry of Information within Family Networks. IZA Discussion Paper No. 8395, Available at SSRN: https://ssrn.com/abstract=2492402

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

University of Toulouse 1 - Advanced Research in Quantitative Applied Development Economics (ARQADE) ( email )

21 Allee de Brienne
Toulouse, 31000
France
+33 5 6112 8529 (Phone)
+33 5 6112 8538 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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