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Characterization of the lexicographic egalitarian solution in the two-person bargaining problem

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  • Mori, Osamu

Abstract

In this study, we provide a new characterization of the lexicographic egalitarian solution in the two-person bargaining problem using the Independence of Common Monotone Transformations axiom introduced by Nielsen (1983). We introduce two new axioms, Strict Suppes-Sen Proofness and Restricted Equity. Strict Suppes-Sen Proofness, which is analogous to Mariotti’s (1999) Suppes-Sen Proofness, represents impartiality in the use of the strong Pareto optimality. Restricted Equity represents the ethical notion that the more equitable distribution of utility gains relative to the disagreement point should be preferred if the total gain is fixed. Then, we show that the lexicographic egalitarian solution is characterized by Strict Suppes-Sen Proofness, Restricted Equity, and Independence of Common Monotone Transformations.

Suggested Citation

  • Mori, Osamu, 2017. "Characterization of the lexicographic egalitarian solution in the two-person bargaining problem," Economics Letters, Elsevier, vol. 159(C), pages 7-9.
    • Handle: RePEc:eee:ecolet:v:159:y:2017:i:c:p:7-9
    DOI: 10.1016/j.econlet.2017.06.044
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    References listed on IDEAS

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    1. Marco Mariotti, 1999. "Fair Bargains: Distributive Justice and Nash Bargaining Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 733-741.
    2. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    3. Neilsen, Lars Tyge, 1983. "Ordinal Interpersonal Comparisons in Bargaining," Econometrica, Econometric Society, vol. 51(1), pages 219-221, January.
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    Cited by:

    1. William Thomson, 2022. "On the axiomatic theory of bargaining: a survey of recent results," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 491-542, December.

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    More about this item

    Keywords

    Bargaining theory; Axiomatic characterization; The lexicographic egalitarian bargaining solution; Independence of common monotone transformations; Impartiality; Equity;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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