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Asymmetric Information in Couples

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  • Michele Tertilt

    (University of Mannheim)

  • Matthias Doepke

    (Northwestern University)

Abstract

There exists ample evidence for limited risk-sharing between spouses. Previous theoretical work has mostly focused on limited commitment as the friction causing the lack of insurance. Recent evidence from field experiments with married couples in developing countries points to the importance of asymmetric information. In this paper we introduce private information in models of household decision-making and explore its implications for risk-sharing. Different from standard private information models aimed to study social insurance, our household model includes three distinct features. (i) Individual income shocks imply (household) aggregate shocks, (ii) the presence of household public goods, (iii) altruism.

Suggested Citation

  • Michele Tertilt & Matthias Doepke, 2015. "Asymmetric Information in Couples," 2015 Meeting Papers 606, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:606
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    References listed on IDEAS

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    Cited by:

    1. Doepke, M. & Tertilt, M., 2016. "Families in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1789-1891, Elsevier.
    2. Ctirad Slavik & Kevin Wiseman, 2018. "Tough Love for Lazy Kids: Dynamic Insurance and Equal Bequests," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 27, pages 64-80, January.

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