Abstract
We develop a model of intergenerational co‐residence and transfers within the family in a setting of asymmetric information. Following an exchange motive, altruistic parents receive services from their children, who may make them financial gifts in return. However, parents do not know the privacy cost to children of home‐sharing. Hence they make additional transfers in order to discipline their children and give them incentives to reveal their true privacy cost. We show that only children who stay at the parental home receive an informational rent, and that this rent is greater for recipients with a low privacy cost.
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