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Efficiency versus equality in bargaining

Galeotti, Fabio; Montero, Maria; Poulsen, Anders

Authors

Fabio Galeotti

Anders Poulsen



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.

Journal Article Type Article
Publication Date Aug 31, 2018
Journal Journal of the European Economic Association
Print ISSN 1542-4766
Electronic ISSN 1542-4774
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
APA6 Citation Galeotti, F., Montero, M., & Poulsen, A. (2018). Efficiency versus equality in bargaining. Journal of European Economic Association, https://doi.org/10.1093/jeea/jvy030
DOI https://doi.org/10.1093/jeea/jvy030
Keywords bargaining, efficiency, equality, communication, experiment,independence of irrelevant alternatives
Publisher URL https://academic.oup.com/jeea/advance-article/doi/10.1093/jeea/jvy030/5088947
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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