Nonmarket transfers and altruism

Abstract

We examine altruistically motivated consumption transfers in an effort to account for nonmarket transfers. We find that altruistic linkages lead to autonomous, negotiation-free transfers, and that such transfers positively respond to stronger altruism. We also find that given fairly natural assumptions concerning the altruism parameters, mutual altruism does not necessarily result in group (social) harmony, even though its rise narrows the conflict range. In spite of enhanced transfers prompted by such a rise, both parties may end up worse off. These results help explain why in some social environments a shift toward market-oriented transfers and exchanges may be quicker than in others, as the disadvantages (decline in utility) associated with intragroup altruistic linkages outweigh the advantages.