(In)Efficient Bargaining in the Family

Jean-Paul Chavas (), Eleonora Matteazzi, Martina Menon () and Federico Perali
Additional contact information
Jean-Paul Chavas: Department of Agricultural and Applied Economics, University of Wisconsin-Madison
Martina Menon: Department of Economics, University of Verona

No 2, Working Papers from SITES

Abstract:

This paper describes how families bargain to reach an agreement recognizing that the negotiation process is costly and often difficult. Our focus is not only on the efficient outcomes of the decision process but also on the bargaining process. We propose an evolutionary bargaining approach that identifies who is willing to make a concession depending on the perceived cost of bargaining failure. The theoretical analysis extends the original Nash-Harsanyi cardinal representation to ordinal preferences and rationalizes agreements that can be inefficient. Implications for efficiency and income distribution are discussed. We illustrate the usefulness of our theory in an empirical application.

Keywords: Bargaining agreements; household efficiency; intra-household welfare; threat strategies (search for similar items in EconPapers)
JEL-codes: D13 D61 D74 (search for similar items in EconPapers)
Date: 2022-04
Note: SITES Working Papers 2
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Persistent link: https://EconPapers.repec.org/RePEc:awm:wpaper:2

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