Open AccessGames Parents and Adolescents Play: Risky Behaviour, Parental Reputation and Strategic Transfers *
Author(s) -
Hao Lingxin,
Hotz V. Joseph,
Jin Ginger Z.
Publication year - 2008
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/j.1468-0297.2008.02132.x
Subject(s) - reputation , drop out , incentive , psychology , developmental psychology , order (exchange) , social psychology , repeated game , economics , demographic economics , game theory , microeconomics , political science , law , finance
This article examines parental reputation formation in intra‐familial interactions. In a repeated two‐stage game, children decide whether to drop out of high school or daughters decide whether to have births as teens and parents then decide whether to provide support to their children beyond age 18. Drawing on Milgrom and Roberts (1982) and Kreps and Wilson (1982), we show that, under certain conditions, parents have the incentive to penalise older children for their adolescent risk‐taking behaviour in order to dissuade their younger children from such behaviour when reaching adolescence. We find evidence in favour of this parental reputation model.