I state and prove formal versions of the claim that the Nash (Econometrica 18: 155–162, 1950) bargaining solution creates a compromise between egalitarianism and utilitarianism, but that this compromise is “biased”: the Nash solution puts more emphasis on utilitarianism than it puts on egalitarianism. I also extend the bargaining model by assuming that utility can be transferred between the players at some cost (the transferable and non-transferable utility models are polar cases of this more general one, corresponding to the cases where the transfer cost is zero and infinity, respectively); I use the extended model to better understand the connections between egalitarianism and utilitarianism.
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© 2014, Springer Science+Business Media New York.
- Nash solution
ASJC Scopus subject areas
- Decision Sciences (all)
- Developmental and Educational Psychology
- Arts and Humanities (miscellaneous)
- Applied Psychology
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- Computer Science Applications