IDEAS home Printed from https://ideas.repec.org/p/eca/wpaper/2013-271579.html
   My bibliography  Save this paper

Weakening Transferable Utility: the Case of Non-intersecting Pareto Curves

Author

Listed:
  • Thomas Demuynck
  • Tom Potoms

Abstract

Transferable utility (TU) is a widely used assumption in economics. In this paper, we weaken the TU property to the setting where distinct Pareto frontiers have empty intersections. We call this the no-intersection property (NIP). We show that the NIP is strictly weaker than TU, but still maintains several desirable properties. We discuss the NIP property in relation to several models where TU has turned out to be a key assumption: models of assortative matching, the Coase theorem and Becker's Rotten Kid theorem. We also investigate classes of utility functions for which theNIP holds uniformly.

Suggested Citation

  • Thomas Demuynck & Tom Potoms, 2018. "Weakening Transferable Utility: the Case of Non-intersecting Pareto Curves," Working Papers ECARES 2018-17, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/271579
    as

    Download full text from publisher

    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/271579/3/2018-17-DEMUYNCK_POTOMS-weakening.pdf
    File Function: Œuvre complète ou partie de l'œuvre
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2015. "Is utility transferable? a revealed preference analysis," Theoretical Economics, Econometric Society, vol. 10(1), January.
    3. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female Labor Supply, Human Capital, and Welfare Reform," Econometrica, Econometric Society, vol. 84, pages 1705-1753, September.
    4. Patrick Legros & Andrew F. Newman, 2007. "Beauty Is a Beast, Frog Is a Prince: Assortative Matching with Nontransferabilities," Econometrica, Econometric Society, vol. 75(4), pages 1073-1102, July.
    5. Pierre-André Chiappori & Monica Costa Dias & Costas Meghir, 2018. "The Marriage Market, Labor Supply, and Education Choice," Journal of Political Economy, University of Chicago Press, vol. 126(S1), pages 26-72.
    6. Marko Tervio, 2008. "The Difference That CEOs Make: An Assignment Model Approach," American Economic Review, American Economic Association, vol. 98(3), pages 642-668, June.
    7. Patrick Legros & Andrew Newman, 2007. "Beauty is a beast, frog is a prince :assortative matching in a nontransferable world," ULB Institutional Repository 2013/7022, ULB -- Universite Libre de Bruxelles.
    8. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    9. Kaneko, Mamoru, 1982. "The central assignment game and the assignment markets," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 205-232, September.
    10. Georg Nöldeke & Larry Samuelson, 2018. "The Implementation Duality," Econometrica, Econometric Society, vol. 86(4), pages 1283-1324, July.
    11. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-180, January.
    12. de Clippel, Geoffroy, 2008. "An axiomatization of the inner core using appropriate reduced games," Journal of Mathematical Economics, Elsevier, vol. 44(3-4), pages 316-323, February.
    13. Richard C. Cornes & Emilson C. D. Silva, 1999. "Rotten Kids, Purity, and Perfection," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 1034-1040, October.
    14. King, Robert G & Plosser, Charles I & Rebelo, Sergio T, 2002. "Production, Growth and Business Cycles: Technical Appendix," Computational Economics, Springer;Society for Computational Economics, vol. 20(1-2), pages 87-116, October.
    15. Pierre-Andre Chiappori & Maurizio Mazzocco, 2017. "Static and Intertemporal Household Decisions," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 985-1045, September.
    16. Hurwicz, Leonid, 1995. "What is the Coase Theorem?," Japan and the World Economy, Elsevier, vol. 7(1), pages 49-74, May.
    17. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2015. "Is utility transferable? a revealed preference analysis," Theoretical Economics, Econometric Society, vol. 10(1), January.
    18. Legros, Patrick & Newman, Andrew, 2010. "Co-ranking mates: Assortative matching in marriage markets," Economics Letters, Elsevier, vol. 106(3), pages 177-179, March.
    19. Hector Chade & Jan Eeckhout & Lones Smith, 2017. "Sorting through Search and Matching Models in Economics," Journal of Economic Literature, American Economic Association, vol. 55(2), pages 493-544, June.
    20. Pierre-Andre Chiappori & Ivan Werning, 2002. "Comment on "Rotten Kids, Purity, and Perfection"," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 475-504, April.
    21. Bergstrom, Ted, 2017. "When was Coase right?," University of California at Santa Barbara, Economics Working Paper Series qt6136k9kh, Department of Economics, UC Santa Barbara.
    22. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
    23. Chiappori, Pierre-Andre, 2010. "Testable implications of transferable utility," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1302-1317, May.
    24. Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
    25. Chiappori, Pierre-André & Gugl, Elisabeth, 2020. "Transferable utility and demand functions," Theoretical Economics, Econometric Society, vol. 15(4), November.
    26. Gary S. Becker, 1974. "A Theory of Marriage," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 299-351, National Bureau of Economic Research, Inc.
    27. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-1159, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Edoardo Ciscato, 2019. "Matching models with and without frictions : applications to the economics of the family [Modèles d'appariement avec et sans frictions : applications à l'économie de la famille]," SciencePo Working papers tel-03411916, HAL.
    2. Ken‐Ichi Shimomura, 2022. "The bargaining set and coalition formation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(1), pages 16-37, March.
    3. Edoardo Ciscato, 2019. "Matching models with and without frictions : applications to the economics of the family [Modèles d'appariement avec et sans frictions : applications à l'économie de la famille]," SciencePo Working papers Main tel-03411916, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2017. "Household Consumption When the Marriage Is Stable," American Economic Review, American Economic Association, vol. 107(6), pages 1507-1534, June.
    2. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2015. "Is utility transferable? a revealed preference analysis," Theoretical Economics, Econometric Society, vol. 10(1), January.
    3. Salanié, Bernard & Chiappori, Pierre-André, 2021. "Mating Markets," CEPR Discussion Papers 16041, C.E.P.R. Discussion Papers.
      • Pierre-André Chiappori & Bernard Salanié, 2021. "Mating Markets," Working Papers 2021-016, Human Capital and Economic Opportunity Working Group.
    4. Mikhail Freer & Khushboo Surana, 2021. "Marital Stability With Committed Couples: A Revealed Preference Analysis," Papers 2110.10781, arXiv.org, revised Sep 2024.
    5. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    6. Alfred Galichon & Simon Weber, 2024. "Matching under Imperfectly Transferable Utility," Papers 2403.05222, arXiv.org, revised Oct 2024.
    7. Rania Gihleb & Osnat Lifshitz, 2022. "Dynamic Effects of Educational Assortative Mating on Labor Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 46, pages 302-327, October.
    8. Chiappori, Pierre-André & Reny, Philip J., 2016. "Matching to share risk," Theoretical Economics, Econometric Society, vol. 11(1), January.
    9. Alfred Galichon & Scott Kominers & Simon Weber, 2014. "An Empirical Framework for Matching with Imperfectly Transferable Utility," SciencePo Working papers Main hal-03460155, HAL.
    10. Jan Eeckhout & Alireza Sepahsalari, 2024. "The Effect of Wealth on Worker Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(3), pages 1584-1633.
    11. Nicolas Bonneton & Christopher Sandmann, 2023. "Non-Stationary Search and Assortative Matching," CRC TR 224 Discussion Paper Series crctr224_2023_465, University of Bonn and University of Mannheim, Germany.
    12. Li, Zhan, 2017. "Shareholder Activism Externalities," MPRA Paper 91635, University Library of Munich, Germany, revised 21 Jan 2019.
    13. Jara-Díaz, Sergio & Rosales-Salas, Jorge, 2017. "Beyond transport time: A review of time use modeling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 209-230.
    14. Hofmann, Dirk & Qari, Salmai, 2011. "The law of attraction bilateral search and horizontal heterogeneity," SFB 649 Discussion Papers 2011-017, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    15. Edoardo Ciscato, 2019. "Matching models with and without frictions : applications to the economics of the family [Modèles d'appariement avec et sans frictions : applications à l'économie de la famille]," SciencePo Working papers tel-03411916, HAL.
    16. Rania Gihleb & Kevin Lang, 2020. "Educational Homogamy and Assortative Mating Have Not Increased," Research in Labor Economics, in: Change at Home, in the Labor Market, and On the Job, volume 48, pages 1-26, Emerald Group Publishing Limited.
    17. Man Si, 2015. "Intrafamily bargaining and love," Review of Economics of the Household, Springer, vol. 13(4), pages 771-789, December.
    18. André de Palma & Nathalie Picard & Ignacio Inoa, 2014. "Discrete choice decision-making with multiple decision-makers within the household," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 16, pages 363-382, Edward Elgar Publishing.
    19. Xiao Yu Wang, 2014. "Risk Sorting, Portfolio Choice, and Endogenous Informal Insurance," NBER Working Papers 20429, National Bureau of Economic Research, Inc.
    20. Alfred Galichon & Scott Kominers & Simon Weber, 2014. "An Empirical Framework for Matching with Imperfectly Transferable Utility," Working Papers hal-03460155, HAL.

    More about this item

    Keywords

    Pareto effciency; Transferable utility; Kaldor-Hicks compensation crite- rion; Assortative matching; Coase theorem; Rotten Kid theorem;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eca:wpaper:2013/271579. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Benoit Pauwels (email available below). General contact details of provider: https://edirc.repec.org/data/arulbbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.