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Strategic Interaction with Altruism: The Economics of Fait Accompli
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
1987 (English)Report (Other academic)
Abstract [en]

The present paper analyzes the strategic and intertemporal insteraction between two well-informed economic agents, who have more or less "altruistic" preferences vis-à-vis each others. The agents may be two individuals, a social bureau and a client, or two units in an organization, etc. It is shown that the presence of altruism in such situations easily leads to socially inefficient outcomes, in which one economic agent "free-rides" on the other's altruism. In the paper, a formal definition of free-riding is suggested, and necessary and sufficient conditions are given for it to occur in subgame perfect equilibrium. We also discuss how such free-riding might be mitigated by social security systems.

Place, publisher, year, edition, pages
Stockholm: IIES , 1987. , 46 p.
Series
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 376
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-41558OAI: oai:DiVA.org:su-41558DiVA: diva2:331170
Available from: 2010-07-21 Created: 2010-07-21 Last updated: 2010-07-21Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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  • Other style
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Language
  • de-DE
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  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
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