Gender Differences in Intra-Household Efficiency: Evidence from an Investment Game Between Spouses in India

In this paper, I test for gender differences in intra-household allocative efficiency through a laboratory experiment with established married couples in India. The experiment presents the couple with the opportunity to earn 50 per cent of daily household expenditure. Spouses played an investment game where one spouse was randomly assigned to the role of sender and the other to receiver. The setting of the game is unique in several ways. There is perfect information over strategies, actions, and final payoffs. Second mover spouses can react to the first movers' actions, which is rare in intra-household experiments. The unitary and cooperative models of the household are rejected as only 5 per cent of men and 2 per cent of women in the sender role play the household earnings maximising strategy. Women send significantly less money than their male counterparts. Women (senders) who keep more money are those in households where husbands' tobacco consumption is largest costing households the equivalent of 30 per cent of daily household expenditure. The results indicate that households operate under non-cooperative bargaining contracts where women are willing to incur costs to maintain control over money.