This paper analyzes a model in which individuals care about both consumption (intrinsic utility) and social status. Status depends on public perceptions about an individual's predispositions rather than on the individual's actions. However, since predispositions are unobservable, actions signal...

Although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation, our under standing of bequest motives remains incomplete. The authors develop a simple model of strategic bequests in which a testator influences the decisions of his...

The purpose of this paper is to explore the welfare properties of dynastic equilibria. There are three central findings. First, under relatively weak conditions, welfare optima cannot be implemented as dynastic equilibria with positive levels of transfers. Second, intergenerational altruism...

Recent work demonstrates that dynastic assumptions guarantee the irrelevance of redistributional policies, distortionary taxes, and prices--the neutrality of fiscal policy (Ricardian equivalence) is only the "tip of the iceberg." This paper investigates the possibility of reinstating approximate...

This note corrects an error in B. Douglas Bernheim's (1986) axiomatic characterization of solution concepts for strategic games. Unlike the correction offered by Olivier De Wolf and Francois Forges (1998), the approach taken here preserves Bernheim's central results concerning the...

Why are observed contracts so often incomplete in the sense that they leave contracting parties' obligations vague or unspecified? Traditional answers to this question invoke transaction costs or bounded rationality. In contrast, the authors argue that such incompleteness is often an essential...

The authors propose and implement a new test of the dividend signaling hypothesis. Dividend signaling models generally imply that an increase in dividend taxation should increase the share price response per dollar of dividends (or 'bang-for-the-buck'). Many other dividend-preference theories...

The authors consider the properties of equilibrium behavior in an aggregative growth model with intergenerational altruism. Various positive properties such as the cyclicity of equilibrium programs and the convergence of equilibrium stocks to a steady state, are analyzed. Among other normative...