Altruistic bequests and non-negative savings
This paper builds on the class of models studying the game interaction between an altruistic benefactor and a selfish recipient. An altruistic parent's bequest is transferred to his selfish son after the former's death and we assume that it is not a valid collateral for bank loans. This is equivalent to adding a non-negativity constraint on savings to the standard bequest model. A crucial mechanism at work is that the son's choice of a level of action can seriously dwarf his budget set. When Becker's resuit holds, the credit constraint places an upper bound on the strategie savings of the Samaritan's dilemma type. But the constraint on savings also causes the shrinkage of the validity domain of the Rotten Kid Theorem because it may lead both poor and rich heirs to behave unoptimally from the family point of view.
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3721794, Harvard University Department of Economics.
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0042, National Bureau of Economic Research, Inc.
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650, Queen's University, Department of Economics.
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- Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," UCLA Economics Working Papers 402, UCLA Department of Economics.
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