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Inequity Aversion May Increase Inequity

Maria Montero

No 2006.80, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Inequity aversion models have been used to explain equitable payoff divisions in bargaining games. I show that inequity aversion can actually increase the asymmetry of payoff division if unanimity is not required. This is due to the analogy between inequity aversion and risk aversion. Inequity aversion may also affect comparative statics: the advantage of being proposer can decrease as players become more impatient.

Keywords: Noncooperative Bargaining; Coalition Formation; Inequity Aversion (search for similar items in EconPapers)
JEL-codes: A13 C78 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-gth and nep-upt
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Journal Article: Inequity Aversion May Increase Inequity (2007)
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