Efficiency versus equality in bargaining

Galeotti, Fabio and Montero, Maria and Poulsen, Anders (2018) Efficiency versus equality in bargaining. Journal of the European Economic Association . ISSN 1542-4774

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Abstract

We consider how the outcome of bargaining varies with changes in the trade-off between equality, efficiency, and total-earnings maximization. We observe that subjects avoid an equal-earnings outcome if it is Pareto inefficient; a large proportion of bargaining pairs avoid an equal and Pareto efficient outcome in favor of one giving unequal and total-earnings maximizing payoffs, and this proportion increases when unequal outcomes imply larger earnings to one of the players, even though this also implies higher inequality; finally, we document a compromise effect that violates the independence of irrelevant alternatives condition.

Item Type: Article
Keywords: bargaining, efficiency, equality, communication, experiment, independence of irrelevant alternatives
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1093/jeea/jvy030
Depositing User: Eprints, Support
Date Deposited: 16 Mar 2018 14:26
Last Modified: 19 Sep 2018 12:53
URI: http://eprints.nottingham.ac.uk/id/eprint/50482

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