Pivato, Marcus (2007): Twofold Optimality of the Relative Utilitarian Bargaining Solution. Forthcoming in:
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Given a bargaining problem, the `relative utilitarian' (RU) solution maximizes the sum total of the bargainer's utilities, after having first renormalized each utility function to range from zero to one. We show that RU is `optimal' in two very different senses. First, RU is the maximal element (over the set of all bargaining solutions) under any partial ordering which satisfies certain axioms of fairness and consistency; this result is closely analogous to the result of Segal (2000). Second, RU offers each person the maximum expected utility amongst all rescaling-invariant solutions, when it is applied to a random sequence of future bargaining problems which are generated using a certain class of distributions; this is somewhat reminiscent of the results of Harsanyi (1953) and Karni (1998).
|Item Type:||MPRA Paper|
|Institution:||Department of Mathematics, Trent University|
|Original Title:||Twofold Optimality of the Relative Utilitarian Bargaining Solution|
|Keywords:||relative utilitarian; bargaining solution; impartial observer|
|Subjects:||D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice ; Clubs ; Committees ; Associations
|Depositing User:||Marcus Pivato|
|Date Deposited:||09. Apr 2007|
|Last Modified:||16. Feb 2013 11:09|
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