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Altruistic bequests and non-negative savings

Published online by Cambridge University Press:  17 August 2016

Stéphane Lambrecht*
Affiliation:
Gremars and Université Charles-de-Gaulle Lille 3 Core and Université catholique de Louvain
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Summary

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 result holds, the credit constraint places an upper bound on the strategic 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.

Résumé

Résumé

Le modèle de ce papier se rattache aux modèles qui étudient les interactions entre un bienfaiteur altruiste et un bénéficiaire égoïste. Le legs est supposé être le seul transfert d'un parent altruiste vers son enfant égoïste. On suppose qu'il ne peut servir de garantie pour emprunter. Cela revient à ajouter une contrainte de non-négativité sur l'épargne au modèle standard avec legs. Le mécanisme crucial sous-jacent au choix d'un niveau d'action par l'enfant est que sa décision peut réduire de façon importante son ensemble de budget. Ce coût, mesuré en termes de possibilités de consommation, a deux effets. Premièrement, il réduit le domaine de validité du théorème de l'Enfant Gâté et peut pousser à la fois les enfants riches et pauvres à se comporte de manière non-optimale du point de vue de la famille. Deuxièmement, quand le résultat de Becker est vérifié, la contrainte de liquidité représente un frein au comportement stratégique d'épargne typique du Dilemne du Samaritain.

Type
Research Article
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2003 

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Footnotes

*

The author thanks anonymous referees for their comments. This paper benefited from helpful discussions with Jean-Pierre Vidal, Philippe Michel and Emmanuel Thibault. The author is grateful to them. All errors remain mine.

Contact address: Gremars and Université Charles-de-Gaulle Lille 3, Domaine universitaire du « Pont de bois », B.P. 149, 59653 Villeneuve d'Ascq cedex, France; e-mail: Iambrecht@univ-lille3.fr.

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