Inequity Aversion May Increase Inequity
AbstractInequity aversion models have been used to explain equitable payoff divisions in bargaining games. I show that inequity aversion can actually increase the asymmetry of payoff division if unanimity is not required. This is due to the analogy between inequity aversion and risk aversion. Inequity aversion may also affect comparative statics: the advantage of being proposer can decrease as players become more impatient.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.80.
Date of creation: May 2006
Date of revision:
Noncooperative Bargaining; Coalition Formation; Inequity Aversion;
Other versions of this item:
- A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-21 (All new papers)
- NEP-GTH-2006-07-21 (Game Theory)
- NEP-UPT-2006-07-21 (Utility Models & Prospect Theory)
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