KING-LEAR DILEMMA - PRECOMMITMENT VERSUS THE LAST WORD

Authors
CHAMI R
Citation
R. Chami, KING-LEAR DILEMMA - PRECOMMITMENT VERSUS THE LAST WORD, Economics letters, 52(2), 1996, pp. 171-176
Citations number
8
Categorie Soggetti
Economics
Journal title
Economics letters → ACNP
ISSN journal
01651765
Volume
52
Issue
2
Year of publication
1996
Pages
171 - 176
Database
ISI
SICI code
0165-1765(1996)52:2<171:KD-PVT>2.0.ZU;2-U
Abstract
We relax the prevalent assumption in the literature on intergeneration al transfers that an altruistic parent can perfectly observe her child 's activities and market opportunities. We find that when private info rmation and market risk are present, precommitment by the parent to a transfer dominates having the 'last word'.