Inequity Aversion May Increase Inequity
Date
01.01.2006
01.01.2006
Authors
Maria Montero
JEL Code
A13,C78
A13,C78
Keywords:
Noncooperative Bargaining,Coalition Formation,Inequity Aversion
Noncooperative Bargaining,Coalition Formation,Inequity Aversion
Publisher
Climate Change and Sustainable Development
Climate Change and Sustainable Development
Editor
Carlo Carraro
Carlo Carraro
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.