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Efficiency-enhancing signalling in the Samaritan's dilemma

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  • Johan Lagerl–f

Abstract

Suppose an altruistic person, "A", is willing to transfer resources to a second person, "B", if "B" comes upon hard times. If "B" anticipates that "A" will act in this manner, "B" will save too little from both agents' point of view. This is the Samaritan's dilemma. This paper shows that the undersaving result is mitigated if we relax the standard assumption of complete information, because if "A" is uncertain about how big "B"'s need for support is, "B" will have an incentive to signal that he is in great need by saving more than he otherwise would have done. Copyright 2004 Royal Economic Society.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 114 (2004)
Issue (Month): 492 (01)
Pages: 55-69

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Handle: RePEc:ecj:econjl:v:114:y:2004:i:492:p:55-69

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  11. Neil Bruce & Michael Waldman, 1988. "Transfers in Kind: Why They Can Be Efficient and Non-Paternalistic," UCLA Economics Working Papers 532, UCLA Department of Economics.
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  14. Johan Lagerlof, 2002. "Efficiency-Enhancing Signalling in the Samaritan's Dilemma," Microeconomics 0207001, EconWPA.
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Cited by:
  1. Amihai Glazer & Hiroki Kondo, 2010. "Governmental Transfers Can Reduce a Moral Hazard Problem," Working Papers 101102, University of California-Irvine, Department of Economics.
  2. Dijkstra, Bouwe R., 2007. "Samaritan versus rotten kid: Another look," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 91-110, September.
  3. Lagerlöf, Johan N.M., 2003. "Efficiency-Enhancing Signalling in the Samaritan's Dilemma," CEPR Discussion Papers 3842, C.E.P.R. Discussion Papers.
  4. J. Atsu Amegashie, 2009. "Third-Party Intervention in Conflicts and the Indirect Samaritan's Dilemma," CESifo Working Paper Series 2695, CESifo Group Munich.
  5. J. Atsu Amegashie, 2006. "Economics, Gratitude, and Warm Glow," Working Papers 0601, University of Guelph, Department of Economics and Finance.

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