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Private Information of Nonpaternalistic Altruism: Exaggeration and Reciprocation of Generosity

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  • Fong Yuk-Fai

    (Northwestern University, y-fong@kellogg.northwestern.edu)

Abstract

Applying techniques developed by Geanakoplos et al. (1989), this paper analyzes the gift exchange between agents with privately observed nonpaternalistic altruism. I find that gift giving between agents under private information of altruism can be analyzed as a conventional signaling game. After applying standard refinements of signaling games, I show that, over nondegenerate ranges of parameter values, private information introduces systematic biases in agents' behavior. First, agents tend to give larger gifts than under full information. Second, despite that fact that agents have no intrinsic concern for reciprocity or fairness, the more altruistic the recipient is, the more the donor exaggerates the gift size. The second finding gives rise to a new theory of reciprocity according to which private information of unconditional altruism can lead to reciprocal behavior.

Suggested Citation

  • Fong Yuk-Fai, 2009. "Private Information of Nonpaternalistic Altruism: Exaggeration and Reciprocation of Generosity," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-32, January.
    • Handle: RePEc:bpj:bejtec:v:9:y:2009:i:1:n:1
    DOI: 10.2202/1935-1704.1506
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    Cited by:

    1. John Duffy & Felix Munoz-Garcia, 2010. "Signaling Concerns about Fairness: Cooperation under Uncertain Social Preferences," Working Papers 2010-19, School of Economic Sciences, Washington State University.
    2. John Duffy & Felix Munoz-Garcia, 2012. "Cooperation and Signaling with Uncertain Social Preferences," Working Paper 491, Department of Economics, University of Pittsburgh, revised May 2013.
    3. John Duffy & Félix Muñoz-García, 2015. "Cooperation and signaling with uncertain social preferences," Theory and Decision, Springer, vol. 78(1), pages 45-75, January.
    4. Munoz-Garcia Felix, 2012. "A systematic procedure for finding Perfect Bayesian Equilibria in Incomplete Information Games," Journal of Industrial Organization Education, De Gruyter, vol. 6(1), pages 1-18, December.

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