Two-sided Altruism and Signaling
Published By: BREAD | Published Date: June, 01 , 2015This paper shows that when donors and recipients care about each other two-sided altruism the presence of asymmetry of information about the donor's income leads very naturally to a signaling game. A donor who cares about the recipient's welfare has incentives to appear richer than he is when the recipient cares about him. Similarly, asymmetry of information regarding the donor's income generates a signaling game in the presence of two-sided altruism. These signaling games put upward pressure on transfers and this pressure increases with the altruism of the recipient.
Author(s): Garance Genicot | Posted on: Jun 25, 2015 | Views() | Download (522)