The Effects of Cooperation: A Structural Model of Siblings' Caregiving Interactions

This paper analyzes the decision making process of adult children to provide informal care to their parents. First, we develop a structural model to explain the amount of time that only children (without siblings) spend on providing care, taking into account opportunity costs in terms of time and money. The model is estimated using two datasets from 12 European countries and reveals the preferences of adult children for consumption, leisure and informal care. Although we assume that differences in behavior between children with and without siblings are due to dissimilar constraints only, by using only children we do not have to make assumptions about interactions between siblings in the structural model. In the presence of siblings, their choices also play a role in the caregiving decision. A central question is whether siblings make cooperative or noncooperative decisions. The second part of this paper aims to establish whether interactions between siblings are cooperative or noncooperative, by comparing predicted cooperative and noncooperative outcomes with observed outcomes. We use the structural parameter estimates from the first part of the paper and model the noncooperative outcomes using a Quantal Response Equilibrium. The results suggest that the nature of the interactions between siblings has a strong effect on the division of informal care between siblings. For almost three quarters of the families the noncooperative model has a better fit than the cooperative model. When the noncooperative families can be pushed into their cooperative outcome, their parents would on average receive 50% more informal care per week from their children, but this would reduce full-time labor supply by 5.7%-points and increase part-time labor supply by 6.7%.time allocation, (non)cooperation, structural modelling

The impact of advertising in a duopoly model

We investigate the impact of advertising in a simple static differentiated duopoly model. First, we consider the Nash equilibrium of the situation in which the duopolistic firms compete simultaneously with two instruments, i.e. the prices and the advertising expenditures. Second, we examine the Nash equilibrium of the situa-tion in which the firms only compete in prices and do not advertise at all. Next, we compare the two different Nash equilibria in order to assess the impact of advertising. In particular, we characterize in terms of the model parameters the circumstances in which the profits, outputs and/or prices of each firm are greater (smaller) in the Nash equilibrium with advertising than in the Nash equilibrium without advertising. We show that the results depend on (a) the size of the (positive) effect of advertising of a firm on its own demand, (b) the size and nature (stimulating or adverse) of the cross-effect of the advertising of each firm on the demand of the other firm, and (c) the size of the autonomous demand of the firms.

A discrete choice model with social interactions: an analysis of high school teen behavior

We develop an empirical discrete choice model that explicitly allows for endogenous social interactions. We analyze the issues of multiple equilibria, statistical coherency, and estimation of the model by means of simulation methods. In an empirical application, we analyze a data set containing information on the individual behavior of some 8000 high school teenagers from almost 500 different school classes. We estimate the model for five types of teen discrete choice behavior: smoking, truanting, moped ownership, cell phone ownership, and asking parents\' permission for purchases. We find strong social interaction effects for behavior closely related to school (truanting), somewhat weaker social interaction effects for behavior partly related to school (smoking, moped and cell phone ownership) and no social interaction effects for behavior far away from school (asking parents\' permission for purchases). Intra-gender interactions are much stronger than cross-gender interactions.

Social ties within school classes –- the roles of gender, ethnicity, and having older siblings

In this paper we identify the lines along which social ties between high school teenagers are primarily formed. To this end, we introduce interaction weights between pupils in the same school class that are a function of exogenous individual background characteristics, like gender, ethnicity, and having older siblings. The resulting model with endogenous interactions and school specific fixed effects is estimated using data from the Dutch National School Youth Survey (NSYS), a survey in which in principle all students in a sampled class are interviewed. By combining the 1992, 1996, 1999 and 2001 NSYS data, we are able identify trends in social relationships of teenagers. We find that the roles that gender and ethnicity play in how teenagers interact varies strongly across different types of behavior. For example, going out shows strong within-ethnicity interactions, while expenditures on cell phone and on clothing exhibit mainly between-girls interactions. Having older siblings has a minor effect on within school class social interactions. There is weak evidence of decreased ethnic segregation within school classes during the decade considered.teenage behavior, social interactions, segregation, time use, expenditures

Flu Shots, Mammograms, and the Perception of Probabilities

We study individuals' decisions to decline or accept preventive health care interventions such as flu shots and mammograms. In particular, we analyze the role of perceptions of the effectiveness of the intervention, by eliciting individuals' subjective probabilities of sickness and survival, with and without the interventions. Respondents appear to be aware of some of the qualitative relationships between risk factors and probabilities. However, on average they have very poor perceptions of the absolute probability levels as reported in the epidemiological literature. Perceptions are less accurate if a respondent is female and has no college degree. Perceived probabilities significantly affect the subsequent take-up rate of flu shots and mammograms.preventive health care, probability perceptions

The Effects of Lottery Prizes on Winners and their Neighbors: Evidence from the Dutch Postcode Lottery

Each week, the Dutch Postcode Lottery (PCL) randomly selects a postal code, and distributes cash and a new BMW to lottery participants in that code. We study the effects of these shocks on lottery winners and their neighbors. Consistent with the life-cycle hypothesis, the effects on winners’ consumption are largely confined to cars and other durables. Consistent with the theory of in-kind transfers, the vast majority of BMW winners liquidate their BMWs. We do, however, detect substantial social effects of lottery winnings: PCL nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants.natural experiments, social interactions