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Almost transferable utility, changes in production possibilities, and the Nash Bargaining and the Kalai-Smorodinsky Solutions

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Abstract

Consider a two-person economy in which allocative efficiency is independent of distribution but cardinality of the agents' utility functions precludes transferable utility. I show that both agents either benefit or lose with any change of production possibilities under the Nash Bargaining and the Kalai-Smorodinsky solutions.

Suggested Citation

  • Elisabeth Gugl, 2007. "Almost transferable utility, changes in production possibilities, and the Nash Bargaining and the Kalai-Smorodinsky Solutions," Department Discussion Papers 0702, Department of Economics, University of Victoria.
    • Handle: RePEc:vic:vicddp:0702
    Note: ISSN 1914-2838
    as

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    File URL: https://www.uvic.ca/socialsciences/economics/_assets/docs/discussion/ddp0702.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. 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 1753-1765, November.
    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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Axiomatic bargaining; resource monotonicity; transferable utility; risk aversion;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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