Working Paper: NBER ID: w31076
Authors: Nina Buchmann; Pascaline Dupas; Roberta Ziparo
Abstract: We study the dynamic relationship between women's intra-household reputation and investment decisions. We consider household investments delegated to the wife in settings where wives perceived to be savvy investors by their husbands are entrusted with a larger budget share. We show, first theoretically, then empirically in a series of experiments in Malawi, that a signaling game can result: to maintain control over a larger budget share, wives (a) under-invest in novel goods with unknown but high expected returns; and (b) knowingly over-use low-return goods in order to hide bad purchase decisions---we call this the intra-household sunk cost effect. These dynamics have important implications for women's well-being as well as for the design of poverty alleviation programs.
Keywords: intrahousehold reputation; investment decisions; financial decision-making; poverty alleviation
JEL Codes: D13; J16; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| perceived expertise (D83) | husbands' transfer decisions (D13) |
| reputation (M14) | amount of money allocated to wives (D13) |
| reputation concerns (M14) | suboptimal investment behavior (G11) |
| reputation dynamics (Z13) | investment choices (G11) |
| reputation risk (D80) | willingness to pay for high-return goods (D11) |