Games Parents and Adolescents Play: Risky Behaviour, Parental Reputation and Strategic Transfers*

Authors


  • *

     This research was funded by a grant from the National Institute for Child Health and Human Development (R01HD34293). We thank Robert Pollak, David Levine and Hongbin Cai for their suggestions at the initial stages of this research and Gary Becker, Meta Brown, Andrew Cherlin, Wilbert van der Klaauw, Tomas Phillipson, Jack Porter, Paul Schultz, Duncan Thomas, participants in workshops at UC-San Diego, UC-Santa Barbara, Washington University, New York University, the NBER Summer Institute, George Mason University, the University of Chicago and the University of Wisconsin for comments on an earlier draft. Obviously, only the authors are responsible for the content of this article.

Abstract

This article examines parental reputation formation in intra-familial interactions. In a repeated two-stage game, children decide whether to drop out of high school or daughters decide whether to have births as teens and parents then decide whether to provide support to their children beyond age 18. Drawing on Milgrom and Roberts (1982) and Kreps and Wilson (1982), we show that, under certain conditions, parents have the incentive to penalise older children for their adolescent risk-taking behaviour in order to dissuade their younger children from such behaviour when reaching adolescence. We find evidence in favour of this parental reputation model.

Ancillary