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Efficiency-Enhancing Signalling in the Samaritan's Dilemma

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  • Lagerlöf, Johan N.M.

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. The logic of the dilemma has been employed in an extensive literature, addressing a wide range of both normative and positive issues. This Paper shows, however, that the under-saving result is mitigated if we relax the standard assumption of complete information. The reason for this is that if A is uncertain about how big B’s need for support is, B will have an incentive to signal that they are in great need by saving more that they otherwise would have done.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3842.

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Date of creation: Mar 2003
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Handle: RePEc:cpr:ceprdp:3842

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Keywords: altruism; efficiency; saving; signalling;

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References

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  1. Laurence J. Kotlikoff, 1987. "Justifying Public Provision of Social Security," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(4), pages 674-696.
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  4. Lagerlöf, Johan N.M., 2003. "Efficiency-Enhancing Signalling in the Samaritan's Dilemma," CEPR Discussion Papers 3842, C.E.P.R. Discussion Papers.
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Cited by:
  1. Lagerlöf, Johan N.M., 2003. "Efficiency-Enhancing Signalling in the Samaritan's Dilemma," CEPR Discussion Papers 3842, C.E.P.R. Discussion Papers.
  2. J. Atsu Amegashie, 2009. "Third-Party Intervention in Conflicts and the Indirect Samaritan's Dilemma," CESifo Working Paper Series 2695, CESifo Group Munich.
  3. J. Atsu Amegashie, 2006. "Economics, Gratitude, and Warm Glow," Working Papers 0601, University of Guelph, Department of Economics and Finance.
  4. Dijkstra, Bouwe R., 2007. "Samaritan versus rotten kid: Another look," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 91-110, September.
  5. Amihai Glazer & Hiroki Kondo, 2010. "Governmental Transfers Can Reduce a Moral Hazard Problem," Working Papers 101102, University of California-Irvine, Department of Economics.

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