Bequests as Signals: An Explanation for the Equal Division Puzzle

In the United States, more than two-thirds of decedents with multi-child families divide their estates exactly equally among their children. In contrast, gifts given before death are usually unequal. These findings challenge the validity of existin gtheories regarding the determination of intergenerational transfers. In this paper, we develop a theory that accounts for this puzzle based on the notion that the devision of bequests provides a signal about a parent's altruistic preferences. The theory can also explain the norm of unigeniture, which prevails in other societies.