Full Citation
Title: Dont Tell on Me: Experimental Evidence of Asymmetric Information in Transnational Households
Citation Type: Miscellaneous
Publication Year: 2012
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Abstract: Although most theoretical models of the household have assumed perfect information, empirical studies suggest that information asymmetries can have large impacts on resource allocation. In this study, I demonstrate their importance in transnational households, where physical distance between family members can make information barriers especially acute. I implement an experiment among 1,300 Salvadoran migrants in Washington, DC and their family members in El Salvador that examines how (1) changing the ability of participants to observe each other and (2) revealing migrant preferences can affect the sending and spending of remittances. Migrants make an incentivized decision over how much of a cash windfall to keep and how much to send home, and recipients over how to allocate the spending of a remittance. Participants are all randomly allocated into two groups: half are told their family member will be informed of their choice and half that their family member will not be informed. Additionally, half the recipients are also informed of the migrants preferences for their choice. Migrants remit significantly less when their choice is secret, but recipients do not alter their spending based on whether or not their choices will be revealed. Recipients do make choices closer to the migrants preferences when they are informed of those preferences. The results are consistent with a model of remittance behavior where migrants and recipients are driven by the extent to which their family can enforce remittance contracts. For example, the effects of the migrant experiment are concentrated among pairs where recipient ability to punish migrants is plausibly high. Given this heterogeneity, the results suggest that while information asymmetries are important, they may not matter for all families where resources are shared.
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Authors: Ambler, Kate
Publisher: University of Michigan
Data Collections: IPUMS USA
Topics: Family and Marriage, Migration and Immigration
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