A Strategic Altruism Model In Which Ricardian Equivalence Does Not Hold
AbstractThis article demonstrates that Ricardian Equivalence does not necessarily hold in models with altruistic transfers once one takes into account the strategic behavior of recipients as well as donors. To influence the final allocation of consumption in altruistic settings, potential recipients can threaten to refuse as well as accept transfers. We apply the Extended Nash Bargaining Solution to the problem of an altruistic parent and a possibly altruistic child. The parent and child first choose a threat point noncooperatively; this threat point then influences the final allocation of consumption through the standard Nash Bargaining Solution, While the potential recipient can refuse transfers from the potential donor, he cannot refuse transfers from the government. When the government redistributes between the parent and child, it changes their endowments and the equilibrium threats, and thus the final allocation of consumption. The feature of the cooperative model presented here that leads to the failure of Ricardian Equivalence may be characteristic of a wider class of cooperative and noncooperative altruism models. This feature is that noninterior strategic postures underlie interior transfer behavior and that these non- interior strategic postures are altered by government redistribution.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2699.
Date of creation: Aug 1991
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Kotlikoff, Laurence J & Razin, Assaf & Rosenthal, Robert W, 1990. "A Strategic Altruism Model in Which Ricardian Equivalence Does Not Hold," Economic Journal, Royal Economic Society, vol. 100(403), pages 1261-68, December.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kotlikoff, Laurence J., 2002.
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 27, pages 1873-1932
- Dobrescu, Loretti I. & Kotlikoff, Laurence J. & Motta, Alberto, 2012.
"Why aren't developed countries saving?,"
European Economic Review,
Elsevier, vol. 56(6), pages 1261-1275.
- Rebelein, Robert P, 1998.
"Ricardian Equivalence Survives Strategic Behavior,"
Public Finance = Finances publiques,
, vol. 53(2), pages 195-228.
- Rebelein, Robert, 2004. "Ricardian Equivalence Survives Strategic Behavior," Vassar College Department of Economics Working Paper Series 62, Vassar College Department of Economics.
- Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, .
"Parental Altruism and Inter Vivos Transfers: Theory and Evidence,"
IPR working papers
95-22, Institute for Policy Resarch at Northwestern University.
- Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-66, December.
- Joseph G. Altonji & Fumio Hayashi & Laurence J. Kotlikoff, 1995. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Boston University - Institute for Economic Development 65, Boston University, Institute for Economic Development.
- Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, 1995. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," NBER Working Papers 5378, National Bureau of Economic Research, Inc.
- Julian Jamison, 2012. "Games with Synergistic Preferences," Games, MDPI, Open Access Journal, vol. 3(1), pages 41-55, March.
- Severinov, Sergei, 2006. "Bequests as signals: Implications for fiscal policy," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1995-2008, November.
- David Altig & Steve J. Davis, 1991.
"Borrowing Constraints and Two-Sided Altruism With an Application to Social Security,"
NBER Working Papers
3913, National Bureau of Economic Research, Inc.
- Altig, David & Davis, Steven J., 1993. "Borrowing constraints and two-sided altruism with an application to social security," Journal of Economic Dynamics and Control, Elsevier, vol. 17(3), pages 467-494, May.
- Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1992.
"Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data,"
American Economic Review,
American Economic Association, vol. 82(5), pages 1177-98, December.
- Joseph G. Altonji & Fumio Hayashi & Laurence J. Kotlikoff, 1993. "Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data," NBER Working Papers 3046, National Bureau of Economic Research, Inc.
- Jorge Soares, 2008. "Borrowing Constraints, Parental Altruism and Welfare," Working Papers 08-12, University of Delaware, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.