Mine, Yours or Ours? The Efficiency of Household Investment Decisions: An Experimental Approach

We conduct an experiment to measure the relative importance of key factors that influence the efficiency of household investment decisions. We find that, both for men and women, their spouse's access to information does not affect efficiency. However, they are willing to sacrifice much ef¬ficiency for greater personal control over household income. Intriguingly, even when spouses' control over household income is exogenously assigned, inefficiency persists: As a wife's assigned share increases, husbands undercut their own income to reduce hers. This self-destructive and spiteful behavior is best explained by non-economic factors such as identity, seldom emphasized in mainstream household economic models.