Non-unitary Models of Household Behavior: A Survey of the Literature

This article considers non-unitary models of household behavior. These models suppose explicitly that households consist of a number of different members with preferences that are different from each other. They can be split up into two principal categories: cooperative (or collective) models, in which the allocations are supposed to be Pareto efficient; and non-cooperative (or strategic) models which are based on the concept of Cournot-Nash equilibrium. The demand functions that describe household behavior in these models are subject to constraints that differ from the traditional Slutsky conditions. In addition, in a certain number of specific cases, the preferences of the different household members can be identified from observable behavior.households, collective model, strategic model, testability, identification

Learning from a Piece of Pie: the Empirical Content of Nash Bargaining

Consider a model of bargaining, in which two players, 1 and 2, share a pie of size y. The bargaining environment is described by a set of parameters ? that may affect agents' preferences over the agreement sharing, the status quo outcome, or both. The outcomes (i.e., whether an agreement is reached, and if so the individual shares) and the environment (including the size of the pie) are known, but neither the agents' utilities nor their threat points. Assuming that the agents adopt a Nash bargaining solution, we investigate the empirical content of this assumption. We first show that in the most general framework, any outcome can be rationalized as a Nash solution. However, if (i) the size of the pie y does not influence the players' threat points and (ii) there exist (at least) two parameters ?1 and ?2 that are player-specific, in the sense that ?i does not influence the utility or the threat point of player j ? i, then Nash bargaining generates strong testable restrictions. Moreover, the underlying structure of the bargaining, i.e., the players' utility and threat point functions, can be recovered under slightly more demanding conditions.Bargaining game, Nash solution, Testability, Identifiability, Cardinal utility

Testing Contract Theory: A Survey of Some Recent Work

While the theoretical literature on contracts has been enormous since the seventies, empirical tests of the theory have long remained scarce. However, new empirical work has been developed in the last ten years that sheds light on the empirical validation of the theory. This paper aims at surveying the recent empirical work on contracts. The focus throughout is on the need to properly account for unobserved heterogeneity.

Relative Risk Aversion Is Constant: Evidence from Panel Data

Most classical tests of constant relative risk aversion (CRRA) based on individual portfolio composition use cross sectional data. Such tests must assume that the distributions of wealth and preferences are independent. We use panel data to analyze how individuals’ portfolio allocation between risky and riskless assets varies in response to changes in total financial wealth. We find the elasticity of the risky asset share to wealth to be small and statistically insignificant, supporting the CRRA assumption; this finding is robust when the sample is restricted to households experiencing ‘large’ income variations. Various extensions are discussed.-

Conférence François-Albert-Angers 2004 : Modèle collectif et analyse de bien-être

Dans cet article, on étudie en quoi l’introduction d’une approche collective modifie les analyses de bien-être classiques en théorie du consommateur. Après avoir défini et caractérisé les principaux concepts, on décrit deux logiques possibles, celle de la « compensation potentielle » et celle de la « compensation effective ». On discute ensuite de leurs implications.In this article, we study how the introduction of a collective approach modifies standard welfare analysis of consumer theory. We first define and characterize the main concepts at stake. Then the two basic logics – “potential compensation” and “actual compensation” – are described, and their implications are discussed

Conférence François-Albert-Angers 2004

In this article, we study how the introduction of a collective approach modifies standard welfare analysis of consumer theory. We first define and characterize the main concepts at stake. Then the two basic logics – “potential compensation” and “actual compensation” – are described, and their implications are discussed. Dans cet article, on étudie en quoi l’introduction d’une approche collective modifie les analyses de bien-être classiques en théorie du consommateur. Après avoir défini et caractérisé les principaux concepts, on décrit deux logiques possibles, celle de la « compensation potentielle » et celle de la « compensation effective ». On discute ensuite de leurs implications.

Collective and Unitary Models: a Clarification

No abstractunitary; collective; intrahousehold allocation; distribution factors; demand

Local disaggregation of demand and excess demand functions: a new question

The literature on the characterization of aggregate excess and market demand has generated three types of results: global, local, or 'at a point'. In this note, we study the relationship between the last two approaches. We prove that within the class of functions satisfying standard conditions and whose Jacobian matrix is negative semi-definite, only n/2 + 1 agents are needed for the 'at' decomposition. We ask whether, within the same class, the 'around' decomposition also requires only n/2 + 1 agents.aggregation; market demand functions

Household Labor Supply, Sharing Rule and the Marriage Market

In this paper we estimate a model of household labor supply based on the collective approach developed by Chiappori (JPE, 1992). This approach assumes that the intra-household decision process leads to Pareto efficient outcomes. Our model extends this theory by allowing the marriage market, and especially the sex ratio, to affect the sharing rule and the household labor supplies. We show that our model imposes new restrictions on the parameters of the labor supply functions. Also, individual preferences and the sharing rule are recovered using an identification procedure that is both simpler and more robust than in Chiappori's initial approach. The model is estimated using PSID data for the year 1988. Our results do not reject the restrictions imposed by the model. Moreover, the sex ratio influences the sharing rule and the labor supply behavior in the directions predicted by the theory. Finally, the impact of individual wage rates suggests that spouses behave in an altruistic manner within the household.

Distributional effects in household models: separate spheres and income pooling

We derive distributional effects for a non-cooperative alternative to the unitary model of household behaviour. We consider the Nash equilibria of a voluntary contributions to public goods game. Our main result is that, in general, the two partners either choose to contribute to di¤erent public goods or they contribute to at most one common good. The former case corresponds to the separate spheres case of Lundberg and Pollak (1993). The second outcome yields (local) income pooling. A household will be in different regimes depending on the distribution of income within the household. Any bargaining model with this non-cooperative case as a breakdown point will inherit the local income pooling. We conclude that targeting benefits such as child benefits to one household member may not always have an effect on outcomes.