Efficiency versus Equality in Bargaining

Galeotti, Fabio, Montero, Maria and Poulsen, Anders (2018) Efficiency versus Equality in Bargaining. Journal of the European Economic Association. ISSN 1542-4766

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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
      Uncontrolled Keywords: bargaining,efficiency,equality,communication,experiment,independence of irrelevant alternatives
      Faculty \ School: Faculty of Social Sciences > School of Economics
      Depositing User: Pure Connector
      Date Deposited: 12 Mar 2018 10:30
      Last Modified: 27 Jan 2019 01:07
      URI: https://ueaeprints.uea.ac.uk/id/eprint/66465
      DOI: 10.1093/jeea/jvy030

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