Altruistic bequests and non-negative savings

Stéphane Lambrecht

No 2003041, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: 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.

Keywords: Altruism; Liquidity constraints (search for similar items in EconPapers)
JEL-codes: D10 D64 D91 (search for similar items in EconPapers)
Pages: 22
Date: 2004-12-01
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http://sites.uclouvain.be/econ/DP/REL/2003041.pdf (application/pdf)

Related works:
Journal Article: Altruistics bequests and non-negative savings (2003)
Working Paper: Altruistic bequests and non-negative savings (2003)
Working Paper: Altruistic Bequests and Non-Negative Savings (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvre:2003041

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