Events

Authors:

• Ingela ALGER
  Carleton University

• Jörgen W. WEIBULL
  Stockholm School of Economics

We analyze the effects of family ties – "the fetters of the sib"- on the incentives for productive effort. A family is here modelled as a pair of mutually altruistic siblings. Each sibling exerts effort, or makes an investment, to produce output under uncertainty, and siblings may transfer output to each other. We show that altruism has a non-monotonic effect on effort. Equilibrium effort decreases (increases) with altruism at low (high) levels of altruism. 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, and that the evolutionarily robust degree of altruism is positive but less than one half. Decreased protection of property rights increases the evolutionarily robust degree of altruism.