NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bequests as a Means of Payment

B. Douglas Bernheim, Andrei Shleifer, Lawrence H. Summers

NBER Working Paper No. 1303 (Also Reprint No. r0697)
Issued in March 1986
NBER Program(s):   PE

Although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation, our understanding of bequest motives remains incomplete. We develop a simple model of"exchange-motivated" bequests, in which a testator influences the decisions ofhis beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries' actions. The model generates falsifiable empirical predictions which are inconsistent with other theories of intergenerational transfers. We present econometric and other evidence which strongly suggests that bequests are often used as a means of payment for services rendered by beneficiaries.

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Document Object Identifier (DOI): 10.3386/w1303

Published: Bernheim, B. Douglas, Andrei Shleifer and Lawrence H. Summers, "The Strategic Bequest Motive," Journal of Political Economy, Vol. 93, No. 6, (December 1985), pp. 1045-1076.

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