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

Author

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  • Nina Buchmann
  • Pascaline Dupas
  • Roberta Ziparo

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 husbands to receive high transfers. This leads them to (i) avoid risky purchases (goods with unknown returns) and (ii) knowingly overuse low-return goods to hide bad purchase decisions—we call this the intrahousehold sunk cost effect. We present supportive evidence for the model from a series of experiments with married couples in rural Malawi.

Suggested Citation

  • Nina Buchmann & Pascaline Dupas & Roberta Ziparo, 2025. "The Good Wife? Reputation Dynamics and Financial Decision-Making inside the Household," American Economic Review, American Economic Association, vol. 115(2), pages 525-570, February.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:2:p:525-70
    DOI: 10.1257/aer.20230393
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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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