Abstract
In this paper, I present results from a field-laboratory experiment in India where individuals in established marriages were randomly given the opportunity to choose to keep money private from their partner, assigned to a complete information, or to a private information treatment. The experiment was designed to test the effect of private information at the time when spouses decide on the amount of resources to bargain over with their partners (pre-bargaining stage) on intra-household allocation. I show that in the presence of asymmetric information 25% of spouses choose to keep (some) money private when given the opportunity, thus reducing the pool that their partners observe. The strategic exploitation of information advantages results in efficiency losses that amount up to 24% of average maximum potential earnings. The analysis suggests the mechanism driving the results is an income-hiding motive, and not alternative explanations such as mental accounting or alternative strategic behaviors.
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