The Nash bargaining solution: sometimes more utilitarian, sometimes more egalitarian

The first-order condition of the Nash bargaining solution equates the ratio of utilities to the ratio of marginal utilities. It turns out that this common ratio plays a role in determining whether the Nash solution, roughly speaking, is “more utilitarian” or “more egalitarian.” More specifically, I...

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Bibliographic Details
Published in:Theory and decision 2023-10, Vol.95 (3), p.457-464
Main Author: Rachmilevitch, Shiran
Format: Article
Language:English
Subjects:
Bargaining
Behavioral/Experimental Economics
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Egalitarianism
Finance
Game Theory
Inequality
Insurance
Management
Operations Research/Decision Theory
Proximity
Social and Behav. Sciences
Statistics for Business
Utilitarianism
Utilities
Utility functions
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Summary:The first-order condition of the Nash bargaining solution equates the ratio of utilities to the ratio of marginal utilities. It turns out that this common ratio plays a role in determining whether the Nash solution, roughly speaking, is “more utilitarian” or “more egalitarian.” More specifically, I propose a sense of proximity to utilitarianism and/or egalitarianism according to which, in bargaining problems with distinct utilitarian and egalitarian points, the Nash solution is closer to utilitarianism if the aforementioned ratio is smaller than one, and closer to egalitarianism if that ratio is greater than one.
ISSN:0040-5833
1573-7187
DOI:10.1007/s11238-023-09930-2