Twofold optimality of the relative utilitarian bargaining solution
AbstractGiven a bargaining problem, the `relative utilitarian' (RU) solution maximizes the sum total of the bargainer's utilities, after having first renormalized each utility function to range from zero to one. We show that RU is `optimal' in two very different senses. First, RU is the maximal element (over the set of all bargaining solutions) under any partial ordering which satisfies certain axioms of fairness and consistency; this result is closely analogous to the result of Segal (2000). Second, RU offers each person the maximum expected utility amongst all rescaling-invariant solutions, when it is applied to a random sequence of future bargaining problems which are generated using a certain class of distributions; this is somewhat reminiscent of the results of Harsanyi (1953) and Karni (1998).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 32 (2009)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00355/index.htm
Other versions of this item:
- Pivato, Marcus, 2007. "Twofold Optimality of the Relative Utilitarian Bargaining Solution," MPRA Paper 2637, University Library of Munich, Germany.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
- Kalai, Ehud, 1977.
"Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons,"
Econometric Society, vol. 45(7), pages 1623-30, October.
- Ehud Kalai, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Discussion Papers 179, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- Edi Karni, 1998. "Impartiality: Definition and Representation," Econometrica, Econometric Society, vol. 66(6), pages 1405-1416, November.
- Amrita Dhillon & Jean-Francois Mertens, 1999.
Econometric Society, vol. 67(3), pages 471-498, May.
- DHILLON, Amrita & MERTENS, Jean-François, . "Relative utilitarianism," CORE Discussion Papers RP -1398, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- DHILLON, Amrita & MERTENS, Jean-François, 1993. "Relative Utilitarianism," CORE Discussion Papers 1993048, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-18, May.
- Uzi Segal, 2000. "Let's Agree That All Dictatorships Are Equally Bad," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 569-589, June.
- Ng, Yew-Kwang, 1975. "Bentham or Bergson? Finite Sensibility, Utility Functions and Social Welfare Functions," Review of Economic Studies, Wiley Blackwell, vol. 42(4), pages 545-69, October.
- Edi Karni & John A. Weymark, 1998. "An informationally parsimonious impartial observer theorem," Social Choice and Welfare, Springer, vol. 15(3), pages 321-332.
- Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
- Sobel, Joel, 2001. "Manipulation of Preferences and Relative Utilitarianism," Games and Economic Behavior, Elsevier, vol. 37(1), pages 196-215, October.
- Amrita Dhillon, 1998. "Extended Pareto rules and relative utilitarianism," Social Choice and Welfare, Springer, vol. 15(4), pages 521-542.
- John C. Harsanyi, 1953. "Cardinal Utility in Welfare Economics and in the Theory of Risk-taking," Journal of Political Economy, University of Chicago Press, vol. 61, pages 434.
- Maskin, Eric, 1978. "A Theorem on Utilitarianism," Review of Economic Studies, Wiley Blackwell, vol. 45(1), pages 93-96, February.
- Edi Karni, 2003. "Impartiality and interpersonal comparisons of variations in well-being," Social Choice and Welfare, Springer, vol. 21(1), pages 95-111, 08.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.