Fixation of inequality and emergence of the equal split norm: Approach from behavioral bargaining theory

Yoshio Kamijo

No 2209, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: Negotiation is at the heart of communication, social exchange, and economic transactions. Using the bargaining model as the unit of analysis, this study aims to deepen our understanding of negotiation and economic behavior based on the behavioral bargaining theory (BBT) developed by Kamijo and Yokote (2022). We introduce a key concept to analyze a bargaining situation: the stability of entitlements (people’s expectations of distribution or sense of ownership) for a bargaining pie. When a pair of entitlements initially formed is stable, negotiations are expected to end immediately; when unstable, negotiations are more likely to end in delay or failure. We show the boundary condition for stable entitlements and find that some unequal distribution between two players can be stable even for a symmetric bargaining problem. By seeking stable entitlements for all members of society, it is possible to define a distribution norm mathematically. We show that the distribution norm that arises in a symmetric situation is the golden rule of distribution: 50–50 split of the pie. Finally, by examining the dynamic process of the formation of entitlements, we clarify the sufficient conditions under which the equal split norm emerges.

Keywords: Behavioral bargaining theory; Nash solution; Reference dependent utility; Stable entitlement; Inequality cap theorem; Distribution norm; Equal split norm (search for similar items in EconPapers)
Pages: 17 pages
Date: 2023-01, Revised 2023-06
New Economics Papers: this item is included in nep-gth and nep-upt
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Citations: View citations in EconPapers (1)

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