How to Preserve a Fortune: An Experimental Comparison of Foundations and Direct Transfers to the Heir

Direct transfers allow heirs to freely use what has been passed on to them. Bequeathers who do not trust their descendants to make proper use of the fortune may prefer investing it in a safe foundation, thereby limiting their descendants’ autonomy. In our study we compare experimentally these two institutional arrangements. Although bequeather and descendant have specific personal interests, they agree in their concern for preserving the fortune. Our results show that bequeathers tend to trust their descendant. When transfers to the descendant are less efficient than investments in a foundation, due to, e.g., inheritance taxation, overall bequests decrease significantly.

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Authors:	Güth, Werner ; Koschmieder, Kurt-Dieter ; Levati, Maria Vittoria ; Martin, Ev
Institutions:	Max-Planck-Institut zur Erforschung von Wirtschaftssystemen <Jena> / Abteilung Strategische Interaktion
Subject:	Experiment \| Experiments \| Spieltheorie \| game theory \| Rentabilität \| tax subsidies \| Erbschaft \| Treuhand \| trust

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Extent:	270336 bytes 24 p. application/pdf
Series:	Max-Planck-Institut für Ökonomik <Jena> - Abteilung für Strategische Interaktion - Papers on Strategic Interaction
Type of publication:	Book / Working Paper
Language:	English
Classification:	C72 - Noncooperative Games ; C92 - Laboratory; Group Behavior ; D31 - Personal Income, Wealth and Their Distributions ; H41 - Public Goods ; Entrepreneurship. Biographies of entrepreneurs ; Corporate taxation and accounting. Other aspects ; Individual Working Papers, Preprints ; No country specification
Source:	USB Cologne (business full texts)

Persistent link: https://www.econbiz.de/10005866700