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  5. The Good Wife? Reputation Dynamics and Financial Decision-Making inside the Household

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Good Wife? Reputation Dynamics and Financial Decision-Making inside the Household

  • Nina Buchmann
  • Pascaline Dupas
  • Roberta Ziparo
American Economic Review (Forthcoming)

Abstract

We study reputation dynamics within the household in a setting where women regularly receive transfers from their husbands for household purchases. We propose a signaling model in which wives try to maintain a good reputation in the eyes of their husband to receive high transfers. This leads them to (a) avoid risky purchases (goods with unknown returns); and (b) knowingly over-use low-return goods to hide bad purchase decisions—we call this the intra-household sunk cost effect. We present supportive evidence for the model from a series of experiments with married couples in rural Malawi.

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