rotten kid theorem

Theodore C. Bergstrom
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

The rotten kid theorem states that, if a household head is sufficiently rich and benevolent towards other household members, then it is in the self-interest of other household members to take those actions that maximize the total income of the household, even at a cost to their own private income. This theorem holds under certain restrictive assumptions, but the assumptions needed for it to be true are not satisfied in many common family decision-making environments.
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How to cite this article

Bergstrom, Theodore C. "rotten kid theorem." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 26 November 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_R000239> doi:10.1057/9780230226203.1462

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