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Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions

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Author Info
Elisabeth Gugl
Justin Leroux

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Abstract

Consider an n-person economy in which efficiency is independent of distribution but the cardinal properties of the agents’ utility functions precludes transferable utility (a property we call “Almost TU”). We show that Almost TU is a necessary and sufficient condition for all agents to either benefit jointly or suffer jointly with any change in production possibilities under well-behaved generalized utilitarian bargaining solutions (of which the Nash Bargaining and the utilitarian solutions are special cases). We apply the result to household decisionmaking in the contex of the Rotten Kid Theorem and in evaluating a change in family taxation.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 0938.

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Date of creation: 2009
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Handle: RePEc:lvl:lacicr:0938

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Related research
Keywords: Axiomatic Bargaining; Solidarity; Transferable Utility; FamilyT-taxation; Rotten Kid Theorem;

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Find related papers by JEL classification:
C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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References listed on IDEAS
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.:
  1. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Chun, Youngsub & Thomson, William, 1988. "Monotonicity properties of bargaining solutions when applied to economics," Mathematical Social Sciences, Elsevier, vol. 15(1), pages 11-27, February. [Downloadable!] (restricted)
  3. Antoine Bommier & Pierre Dubois, 2004. "Rotten Parents and Child Labor," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 240-248, February. [Downloadable!] (restricted)
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  4. Bergstrom, Theodore C. & Varian, Hal R., 1985. "When do market games have transferable utility?," Journal of Economic Theory, Elsevier, vol. 35(2), pages 222-233, August. [Downloadable!] (restricted)
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  5. Anbarci, Nejat & Skaperdas, Stergios & Syropoulos, Constantinos, 2002. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms against Threats Can Have Real Effects," Journal of Economic Theory, Elsevier, vol. 106(1), pages 1-16, September. [Downloadable!] (restricted)
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  6. Ted Bergstrom, 1989. "A Fresh Look at the Rotten Kid Theorem--And Other Household Mysteries," University of California at Santa Barbara, Economics Working Paper Series 1989A, Department of Economics, UC Santa Barbara. [Downloadable!]
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  7. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April. [Downloadable!] (restricted)
  8. Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February. [Downloadable!] (restricted)
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  9. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August. [Downloadable!] (restricted)
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This page was last updated on 2009-11-19.

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