Characterization of the lexicographic egalitarian solution in the two-person bargaining problem

Osamu Mori

Economics Letters, 2017, vol. 159, issue C, 7-9

Abstract: In this study, we provide a new characterization of the lexicographic egalitarian solution in the two-person bargaining problem using the Independence of Common Monotone Transformations axiom introduced by Nielsen (1983). We introduce two new axioms, Strict Suppes-Sen Proofness and Restricted Equity. Strict Suppes-Sen Proofness, which is analogous to Mariotti’s (1999) Suppes-Sen Proofness, represents impartiality in the use of the strong Pareto optimality. Restricted Equity represents the ethical notion that the more equitable distribution of utility gains relative to the disagreement point should be preferred if the total gain is fixed. Then, we show that the lexicographic egalitarian solution is characterized by Strict Suppes-Sen Proofness, Restricted Equity, and Independence of Common Monotone Transformations.

Keywords: Bargaining theory; Axiomatic characterization; The lexicographic egalitarian bargaining solution; Independence of common monotone transformations; Impartiality; Equity (search for similar items in EconPapers)
JEL-codes: C78 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:159:y:2017:i:c:p:7-9

DOI: 10.1016/j.econlet.2017.06.044

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