Pivato, Marcus
(2007):
*Twofold Optimality of the Relative Utilitarian Bargaining Solution.*
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## Abstract

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 |
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Institution: | Department of Mathematics, Trent University |

Original Title: | Twofold Optimality of the Relative Utilitarian Bargaining Solution |

Language: | English |

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 |

Item ID: | 2637 |

Depositing User: | Marcus Pivato |

Date Deposited: | 09 Apr 2007 |

Last Modified: | 26 Sep 2019 10:11 |

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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/2637 |