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Inequity Aversion May Increase Inequity

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  • Maria Montero

    (University of Nottingham)

Abstract

Inequity 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.

Suggested Citation

  • Maria Montero, 2006. "Inequity Aversion May Increase Inequity," Working Papers 2006.80, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2006.80
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    Cited by:

    1. Kohler, Stefan, 2013. "Inequality aversion causes equal or unequal division in alternating-offer bargaining," MPRA Paper 40764, University Library of Munich, Germany.
    2. repec:kap:pubcho:v:173:y:2017:i:1:d:10.1007_s11127-017-0470-8 is not listed on IDEAS
    3. repec:eee:gamebe:v:107:y:2018:i:c:p:60-92 is not listed on IDEAS
    4. John Duffy & Félix Muñoz-García, 2012. "Patience or Fairness? Analyzing Social Preferences in Repeated Games," Games, MDPI, Open Access Journal, vol. 3(1), pages 1-22, March.
    5. Maaser, Nicola & Traub, Stefan & Paetzel, Fabian, 2017. "Power illusion in coalitional bargaining: An experimental analysis," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168155, Verein für Socialpolitik / German Economic Association.
    6. Gary Bolton & Jeannette Brosig-Koch, 2012. "How do coalitions get built? Evidence from an extensive form coalition game with and without communication," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(3), pages 623-649, August.
    7. Stefan Kohler, 2012. "Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining," Games, MDPI, Open Access Journal, vol. 3(3), pages 1-19, September.
    8. Guillaume Fréchette & John Kagel & Massimo Morelli, 2012. "Pork versus public goods: an experimental study of public good provision within a legislative bargaining framework," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(3), pages 779-800, April.
    9. Breitmoser, Yves & Tan, Jonathan H.W., 2010. "Generosity in bargaining: Fair or fear?," MPRA Paper 27444, University Library of Munich, Germany.
    10. repec:pit:wpaper:383 is not listed on IDEAS
    11. Drouvelis, Michalis & Montero, Maria & Sefton, Martin, 2010. "Gaining power through enlargement: Strategic foundations and experimental evidence," Games and Economic Behavior, Elsevier, vol. 69(2), pages 274-292, July.
    12. Rasch, Alexander & Wambach, Achim & Wiener, Kristina, 2012. "Bargaining and inequity aversion: On the efficiency of the double auction," Economics Letters, Elsevier, vol. 114(2), pages 178-181.
    13. Breitmoser, Yves & Tan, Jonathan H.W., 2013. "Reference dependent altruism in demand bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 127-140.
    14. Nunnari, Salvatore & Zapal, Jan, 2016. "Gambler's fallacy and imperfect best response in legislative bargaining," Games and Economic Behavior, Elsevier, vol. 99(C), pages 275-294.
    15. Maria Montero, 2008. "Altruism, Spite and Competition in Bargaining Games," Theory and Decision, Springer, vol. 65(2), pages 125-151, September.
    16. Christiansen, Nels, 2015. "Greasing the wheels: Pork and public goods contributions in a legislative bargaining experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 64-79.
    17. repec:spr:jesaex:v:3:y:2017:i:1:d:10.1007_s40881-017-0038-x is not listed on IDEAS
    18. Breitmoser, Yves & Tan, Jonathan H.W., 2014. "Reference Dependent Altruism," MPRA Paper 52774, University Library of Munich, Germany.
    19. Breitmoser, Yves & Tan, Jonathan H.W., 2011. "Ultimata bargaining: generosity without social motives," MPRA Paper 33613, University Library of Munich, Germany.
    20. Yves Breitmoser, 2011. "Parliamentary bargaining with priority recognition for committee members," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(1), pages 149-169, June.
    21. Kohler, Stefan, 2012. "Envy can promote more equal division in alternating-offer bargaining," MPRA Paper 40761, University Library of Munich, Germany.
    22. Miller, Luis & Montero, Maria & Vanberg, Christoph, 2018. "Legislative bargaining with heterogeneous disagreement values: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 107(C), pages 60-92.

    More about this item

    Keywords

    Noncooperative Bargaining; Coalition Formation; Inequity Aversion;

    JEL classification:

    • 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

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