Is Ignorance Bliss? The Effect of Asymmetric Information between Spouses on Intra-household Allocations

American Economic Review · 2013 · Volume 103 · Issue 3

Abstract

We conducted a field experiment in Southern Ghana to test the effect of asymmetric information on intrahousehold allocation. A lottery was conducted, where prizes were distributed in public and in private. The results indicate that asymmetric information over windfalls has a differential effect on observable and concealable expenses, consistent with hiding. Husbands' public windfalls increase investment in assets and social capital, while there is no such effect when wives win. Private windfalls of both spouses are committed to cash (wives) or in-kind gifts (husband) which are either difficult to monitor or to reverse if discovered by the other spouse.

Keywords

Household Production and Intrahousehold Allocation, Asymmetric and Private Information, Mechanism Design, Microeconomic Analyses of Economic Development

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