Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions
Consider a two-person economy in which allocative efficiency is independent of distribution but the cardinal properties of the agents' utility functions precludes transferable utility (a property I call “Almost TU”). I show that Almost TU is a necessary and sufficient condition for both agents to either benefit or to lose with any change in production possibilities under generalized utilitarian bargaining solutions (of which the Nash Bargaining solution is a special case) and under the Kalai-Smorodinsky solution. I apply the result to household decision-making in the context of the Rotten Kid Theorem and discuss other applications.
|Date of creation:||02 Nov 2007|
|Date of revision:|
|Contact details of provider:|| Postal: PO Box 1700, STN CSC, Victoria, BC, Canada, V8W 2Y2|
Web page: http://web.uvic.ca/econ
More information through EDIRC
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.:
- Matthias Wrede, 2003. "The Income Splitting Method: Is it Good for Both Marriage Partners?," German Economic Review, Verein für Socialpolitik, vol. 4(2), pages 203-216, 05.
- Nicolo, Antonio & Perea, Andres, 2005. "Monotonicity and equal-opportunity equivalence in bargaining," Mathematical Social Sciences, Elsevier, vol. 49(2), pages 221-243, March.
- Anbarci, N. & Skaperdas, S. & Syropoulos, C., 2000.
"Comparing Bargaining Solutions in the Shadow of Conflict: How Norms Against Threats Can Have Real Effects,"
00-01-19, California Irvine - School of Social Sciences.
- 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.
- 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.
- Marjorie B. McElroy, 1990. "The Empirical Content of Nash-Bargained Household Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 559-583.
- Elisabeth Gugl, 2009. "Income splitting, specialization, and intra-family distribution," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1050-1071, August.
- Gerber, Anke & Upmann, Thorsten, 2006. "Bargaining solutions at work: Qualitative differences in policy implications," Mathematical Social Sciences, Elsevier, vol. 52(2), pages 162-175, September.
- Bergstrom, Theodore C. & Cornes, Richard C., 1981. "Gorman and Musgrave are dual : An Antipodean theorem on public goods," Economics Letters, Elsevier, vol. 7(4), pages 371-378.
- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
- Gary S. Becker, 1974.
"A Theory of Social Interactions,"
NBER Working Papers
0042, National Bureau of Economic Research, Inc.
- Luis Rubalcava & Duncan Thomas, 2000.
"Family Bargaining and Welfare,"
00-10, RAND Corporation.
- Yongsheng Xu & Naoki Yoshihara, 2008.
"The Behaviour Of Solutions To Bargaining Problems On The Basis Of Solidarity,"
The Japanese Economic Review,
Japanese Economic Association, vol. 59(1), pages 133-138.
- Xu, Yongsheng & Yoshihara, Naoki, 2006. "The behavior of solutions to bargaining problems on the basis of solidarity," Discussion Paper Series a474, Institute of Economic Research, Hitotsubashi University.
- 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.
- Pierre-André Chiappori & Bernard Fortin & Guy Lacroix, 2001.
"Marriage Market, Divorce Legislation and Household Labor Supply,"
CIRANO Working Papers
- 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.
- Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," Cahiers de recherche 0103, Université Laval - Département d'économique.
- Rubinstein, Ariel & Safra, Zvi & Thomson, William, 1992. "On the Interpretation of the Nash Bargaining Solution and Its Extension to Non-expected Utility Preferences," Econometrica, Econometric Society, vol. 60(5), pages 1171-86, September.
- 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.
- Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-65, November.
- Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
- 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.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, June.
- Chiappori, Pierre-Andre, 2010. "Testable implications of transferable utility," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1302-1317, May.
- 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 1138-59, October.
When requesting a correction, please mention this item's handle: RePEc:vic:vicddp:0705. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Giles)
If references are entirely missing, you can add them using this form.