Efficiency-Enhancing Signalling in the Samaritan's Dilemma

Johan Lagerlof

No 3842, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: altruism; Saving; Efficiency; Signalling (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2003-03
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Journal Article: Efficiency-enhancing signalling in the Samaritan's dilemma (2004)
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