[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_5642.html
   My bibliography  Save this paper

The Rotten Kid Theorem and Almost Transferable Utility

Author

Listed:
  • Elisabeth Gugl
  • Justin Leroux
Abstract
We assume like Bergstrom (1989) and Dijkstra (2007) that each child’s utility is treated as a normal good in the altruistic head’s utility function, and show that if utility functions lead to Almost Transferable Utility children can manipulate the tradeoff between their own utility and the parent’s utility through their own actions, but they have an incentive to maximize the altruistic head’s utility if the altruistic head also considers children’s utilities as Hicksian substitutes and hence the rotten kid theorem holds. A special class of such altruistic utility functions that treat utilities of children as normal and Hicksian substitutes are the Generalized Utilitarian Welfare functions.

Suggested Citation

  • Elisabeth Gugl & Justin Leroux, 2015. "The Rotten Kid Theorem and Almost Transferable Utility," CESifo Working Paper Series 5642, CESifo.
    • Handle: RePEc:ces:ceswps:_5642
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp5642.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Hindriks, Jean & Peralta, Susana & Weber, Shlomo, 2008. "Competing in taxes and investment under fiscal equalization," Journal of Public Economics, Elsevier, vol. 92(12), pages 2392-2402, December.
    3. Gugl, Elisabeth & Leroux, Justin, 2011. "Share the gain, share the pain? Almost transferable utility, changes in production possibilities, and bargaining solutions," Mathematical Social Sciences, Elsevier, vol. 62(3), pages 133-143.
    4. Dijkstra, Bouwe R., 2007. "Samaritan versus rotten kid: Another look," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 91-110, September.
    5. Van Kolpin, 2006. "The modeling and analysis of rotten kids," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 26(1), pages 23-30, January.
    6. Richard C. Cornes & Emilson C. D. Silva, 1999. "Rotten Kids, Purity, and Perfection," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 1034-1040, October.
    7. Koethenbuerger, Marko, 2008. "Federal tax-transfer policy and intergovernmental pre-commitment," Regional Science and Urban Economics, Elsevier, vol. 38(1), pages 16-31, January.
    8. Robin Boadway & Jean-Francois Tremblay, 2005. "A Theory of Vertical Fiscal Imbalance," Working Papers 2006-04, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    9. Blomquist, N Soren, 1989. "Comparative Statics for Utility Maximization Models with Nonlinear Budget Constraints," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 275-296, May.
    10. Pierre-Andre Chiappori & Ivan Werning, 2002. "Comment on "Rotten Kids, Purity, and Perfection"," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 475-504, April.
    11. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-1159, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sergio Da Silva, 2024. "Reevaluating the Rotten Kid Theorem: The impact of behavioral biases on family economic decisions," Economics Bulletin, AccessEcon, vol. 44(3), pages 865-879.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. João Ricardo Faria & Emilson Caputo Delfino Silva, 2020. "Leadership delegation in rotten kid families," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(2), pages 441-460, April.
    2. Breuillé, Marie-Laure & Madiès, Thierry & Taugourdeau, Emmanuelle, 2010. "Gross versus net equalization scheme in a federation with decentralized leadership," Journal of Urban Economics, Elsevier, vol. 68(2), pages 205-214, September.
    3. Arnaud Goussebaïle & Antoine Bommier & Amélie Goerger & Jean-Philippe Nicolaï, 2023. "Altruistic Foreign Aid and Climate Change Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(1), pages 219-239, January.
    4. Demuynck, Thomas & Potoms, Tom, 2020. "Weakening transferable utility: The case of non-intersecting Pareto curves," Journal of Economic Theory, Elsevier, vol. 188(C).
    5. Marco Cosconati, 2011. "Parenting Style and the Development of Human Capital in Children," 2011 Meeting Papers 854, Society for Economic Dynamics.
    6. João Ricardo Faria & Emilson C.D. Silva, 2017. "Optimal Timing in Rotten Kid Families," CESifo Working Paper Series 6333, CESifo.
    7. Dijkstra, Bouwe R., 2007. "Samaritan versus rotten kid: Another look," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 91-110, September.
    8. Arthur Caplan & Emilson Silva, 2007. "An equitable, efficient and implementable scheme to control global carbon dioxide emissions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 263-279, June.
    9. Bruno Deffains & Jean Mercier Ythier, 2009. "Optimal production of transplant care services," Working Papers of BETA 2009-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    10. Timothy J. Goodspeed, 2017. "Bailouts and Soft Budget Constraints in Decentralized Government: A Synthesis and Survey of an Alternative View of Intergovernmental Grant Policy," Hacienda Pública Española / Review of Public Economics, IEF, vol. 221(2), pages 113-134, June.
    11. Naoto Aoyama & Emilson C. D. Silva, 2010. "Equitable and Efficient Federal Structures with Decentralized Leadership, Spillovers, and Attachment of Heterogeneous Labor," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(2), pages 323-343, April.
    12. Lechene, Valérie & Preston, Ian, 2011. "Noncooperative household demand," Journal of Economic Theory, Elsevier, vol. 146(2), pages 504-527, March.
    13. Helmuth Cremer & Kerstin Roeder, 2017. "Rotten spouses, family transfers, and public goods," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 141-161, January.
    14. Richard Cornes & Jun-ichi Itaya & Aiko Tanaka, 2012. "Private provision of public goods between families," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1451-1480, October.
    15. Valerie Lechene & Ian Preston & University College London and Institute for Fiscal Studies, 2005. "Household Nash Equilibrium with Voluntarily Contributed Public Goods," Economics Series Working Papers 226, University of Oxford, Department of Economics.
    16. Stephen T. Mennemeyer & Bisakha Sen, 2006. "Undesirable Juvenile Behavior and the Quality of Parental Relationships," Southern Economic Journal, John Wiley & Sons, vol. 73(2), pages 437-460, October.
    17. Deffains, Bruno & Mercier Ythier, Jean, 2010. "Optimal production of transplant care services," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 638-653, October.
    18. Boadway, Robin & Song, Zhen & Tremblay, Jean-François, 2013. "Non-cooperative pollution control in an inter-jurisdictional setting," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 783-796.
    19. Timothy Goodspeed & Andrew Haughwout, 2012. "On the optimal design of disaster insurance in a federation," Economics of Governance, Springer, vol. 13(1), pages 1-27, March.
    20. Johan Lagerl–f, 2004. "Efficiency-enhancing signalling in the Samaritan's dilemma," Economic Journal, Royal Economic Society, vol. 114(492), pages 55-69, January.

    More about this item

    Keywords

    Rotten Kid Theorem; transferable utility; Hicksian substitutes; fiscal federalism;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_5642. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.