Weakening transferable utility: The case of non-intersecting Pareto curves

Thomas Demuynck and Tom Potoms

Journal of Economic Theory, 2020, vol. 188, issue C

Abstract: Transferable utility (TU) is a widely used assumption in economics. In this paper, we weaken the TU property to a setting where distinct Pareto frontiers have empty intersections. We call this the no-intersection property (NIP). We show that the NIP is strictly weaker than TU, but still allows to derive several desirable properties. We discuss the NIP in relation to several models where TU has turned out to be a key assumption: models of assortative matching, principal-agent models with asymmetric information, the Coase Independence Property and Becker's Rotten Kid Theorem.

Keywords: Pareto efficiency; Transferable utility; Assortative matching; Coase Independence Property; Rotten Kid Theorem (search for similar items in EconPapers)
JEL-codes: C78 D13 D60 D61 D62 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Weakening Transferable Utility: the Case of Non-intersecting Pareto Curves (2020)
Working Paper: Weakening Transferable Utility: the Case of Non-intersecting Pareto Curves (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:188:y:2020:i:c:s0022053118303132

DOI: 10.1016/j.jet.2020.105035

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