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By Stark O.

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17). Note that the second term is dS nonnegative. 6)) so that for dF suf®ciently small " the ®rst term is negative. Indeed, by choosing " small enough, we can always make the ®rst (negative) term dominate the second (nonnegative) term. 13)) from father to son! Although consumption transfers 3 4 It may strike the reader as peculiar to differentiate with respect to F since F is a preference parameter. We interpret this procedure as follows. The father's altruism for the son may depend upon various external events.

These institutions are set up in part to create guilt for reneging on such agreements. '' Parents teach children the desired behavior by setting an example. The children must be close by, and examples might have to be visible, and repeated. Such acts might well be costly to parents, who must behave differently than they would if they were not shaping their children's preferences. On the other hand, demonstration can increase the likelihood that children will honor their commitment. How will the demonstration effect facilitate intergenerational exchanges?

But monetary mechanisms may not always work. Suppose a parent lends to his child, expecting repayment in old age. If anticipated future bequests motivate behavior only mildly, or not at all, the parent may have little economic leverage for enforcing an implicit long-term contractual arrangement. The bequest motive might be particu51 Altruism and beyond larly weak in nonwealthy families, and may not work at all when testamentary freedom is precluded by law. Another possible enforcement mechanism is recourse to the legal power of the courts and the state.

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