Governmental Transfers Can Reduce a Moral Hazard Problem
An altruistic agent who may aid a person with a low income may cause that person to exert little effort to increase his income. Such behavior generates a Dilemma, in which welfare is lower than when no one is altruistic. We show how governmental transfers, which do not allow for reallocation from a person who saves much to one who saves little, reduces the effect, and can lead to an outcome which is Pareto-superior to the outcome under a Nash equilibrium with no government taxation and transfers.
|Date of creation:||Oct 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (949) 824-5788
Web page: http://www.economics.uci.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bruce, Neil & Waldman, Michael, 1990.
"The Rotten-Kid Theorem Meets the Samaritan's Dilemma,"
The Quarterly Journal of Economics,
MIT Press, vol. 105(1), pages 155-65, February.
- Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," UCLA Economics Working Papers 402, UCLA Department of Economics.
- Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," Working Papers 650, Queen's University, Department of Economics.
- Johan Lagerlof, 2002.
"Efficiency-Enhancing Signalling in the Samaritan's Dilemma,"
- Johan Lagerl–f, 2004. "Efficiency-enhancing signalling in the Samaritan's dilemma," Economic Journal, Royal Economic Society, vol. 114(492), pages 55-69, 01.
- Lagerlöf, Johan N. M., 2003. "Efficiency-Enhancing Signalling in the Samaritan's Dilemma," CEPR Discussion Papers 3842, C.E.P.R. Discussion Papers.
- Homburg, Stefan, 2000. "Compulsory savings in the welfare state," Journal of Public Economics, Elsevier, vol. 77(2), pages 233-239, August.
- Warr, Peter G., 1982. "Pareto optimal redistribution and private charity," Journal of Public Economics, Elsevier, vol. 19(1), pages 131-138, October.
- Kathleen McGarry & Robert F. Schoeni, 1994. "Transfer Behavior: Measurement and the Redistribution of Resources within the Family," NBER Working Papers 4607, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:irv:wpaper:101102. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer dos Santos)
If references are entirely missing, you can add them using this form.