Working Paper: NBER ID: w21309
Authors: Garance Genicot
Abstract: This 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.
Keywords: altruism; signaling; remittances; information asymmetry
JEL Codes: D64; F24; O15; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Donor's income level (D64) | Perceived wealth by the recipient (D31) |
| Perceived wealth by the recipient (D31) | Amount transferred (F24) |
| Donor's income level (D64) | Amount transferred (F24) |
| Recipient's level of altruism (D64) | Amount transferred (F24) |
| Asymmetry of information regarding donor's altruism (D64) | Amount transferred (F24) |