The stability of intergenerational cooperation in altruistic families

This paper analyses the stability of bargaining solutions in a family consisting of two parents and one adult child, by developing a non-cooperative family game. Assuming different bargaining powers between parents and the child, we find that the greater bargaining power of the parents allows them to take greater gains from the cooperation, and reduce the incentives to deviate from the cooperative agreement. The presence of altruism between the players will significantly reduce the probability that there will be incentives to break the cooperative agreement. A higher level of altruism increases the stability of cooperation, and will overcome the contrary effect of other factors.