Quantitative Economics: Mar, 2017, Volume 8, Issue 1

Do siblings free‐ride in “being there” for parents?

Shiko Maruyama, Meliyanni Johar

There is a potential free‐rider problem when several siblings consider future provision of care for their elderly parents. Siblings can commit to not providing long‐term support by living far away. If location decisions are made by birth order, older siblings may enjoy a first‐mover advantage. We study siblings' location decisions relative to their parents by estimating a sequential participation game for U.S. data. We find (i) limited strategic behavior, that is, in two‐child families, more than 92% of children have a dominant strategy, and (ii) a nonnegligible public good problem, that is, in families with multiple children, 18.3% more parents would have had at least one child living nearby had location decisions been made cooperatively.

Public goods empirical game informal care free‐riding sequential participation game first‐mover advantage prisoners' dilemma C72 D13 D62 D64

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