FEEM working papers "Note di lavoro" series
2006 .080

Inequity Aversion May Increase Inequity


Authors: Maria Montero
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Noncooperative Bargaining,Coalition Formation,Inequity Aversion
JEL n.: A13,C78
JEL: The Economic Journal
Pages: Vol. 117, No. 519, pp. C192-C204(13)
Date: 03/2007

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.

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