Sibling Rivalry and Strategic Parental Transfers

This paper develops a noncooperative Nash model in which two siblings compete for their parentsʹ financial transfers. Treating sibling rivalry as a "rent-seeking contest" and using a Tullock-Skaperdas contest success function, we derive the conditions under which more financial resources are transferred to the sibling with lower earnings. We find that parental transfers are compensatory and that the family as an institution serves as an "income equalizer." Within a sequential game framework, we characterize the endogeneity of parental transfers and link it to parentsʹ income, altruism, and childrenʹs supply of merit goods (e.g., parent-child companionship or child services). We show that merit goods are subject to a "moral hazard" problem from the parentsʹ perspective.