Governmental transfers and altruistic private transfers

If an altruist is expected to aid a person with low utility, that person may be induced to save little. Such behavior generates a good Samaritan dilemma, in which welfare is lower than when no one is altruistic. Governmental transfers, which restrict reallocation from a person who saves much to one who saves little, reduce the effect and can lead to an outcome which is Pareto-superior to the outcome under a Nash equilibrium with no government taxation and transfers. Copyright Springer-Verlag Berlin Heidelberg 2015