www.econstor.eu The Fetters of the Sib: Weber Meets Darwin

We analyze the e¤ects of family ties “the fetters of the sib”on the incentives for productive e¤ort. A family is here modelled as a pair of mutually altruistic siblings. Each sibling exerts e¤ort, or makes an investment, to produce output under uncertainty, and siblings may transfer output to each other. We show that altruism has a nonmonotonic e¤ect on e¤ort. Equilibrium e¤ort decreases (increases) with altruism at low (high) levels of altruism. We study how this e¤ect depends on “climate,”the magnitude and volatility of returns to e¤ort. We also analyze the evolutionary robustness of family ties and how this robustness depends on climate. We …nd that family ties will be stronger in milder climates than in harsher climates, and that the evolutionarily robust degree of altruism is positive but less than one half. Decreased protection of property rights increases the evolutionarily robust degree of altruism. Keywords: altruism, family ties, moral hazard, evolutionary robustness. JEL codes: D02, D13 We are grateful to Daron Acemoglu, Philippe Aghion, Don Cox, Justina Fischer, Karen Norberg, Marcus Salomonsson, and Yannick Viossat for helpful comments and discussions. We also thank audiences at Boston College, Boston University, the Canadian Economics Association, Carleton University, the European Economics Association, HEC Montréal, SUNY Binghamton, Université de Cergy-Pontoise, and Université Laval for feedback. The usual disclaimer applies. Jörgen W. Weibull thanks the Knut and Alice Wallenberg Research Foundation for …nancial support. yA revised version is available at http://www2.hhs.se/personal/Weibull/, and at http://rideau.carleton.ca/~ialger.