Efficiency-Enhancing Signalling in the Samaritan's Dilemma

Johan N. M. Lagerlöf ()

Microeconomics from EconWPA

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 undersaving 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 he is in great need by saving more than he otherwise would have done.

Keywords: altruism; saving; efficiency; signalling (search for similar items in EconPapers)
JEL-codes: D64 D82 E21 D91 D10 H11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2002-07-09
Note: Type of Document - Tex (SWP); prepared on PC; pages: 38 ; figures: included
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Related works:
Working Paper: Efficiency-Enhancing Signalling in the Samaritan's Dilemma (2003)
Journal Article: Efficiency-enhancing signalling in the Samaritan's dilemma (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0207001

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