Share the Gain, Share the Pain? Almost Transferable Utility, changes in production possibilities, and bargaining solutions

We consider an n-person economy in which efficiency is independent of distribution but the cardinal properties of the agents’ utility functions preclude transferable utility (a property we call "Almost TU"). We show that Almost TU is a necessary and sufficient condition for all agents to either benefit jointly or suffer jointly with any change in production possibilities under well-behaved generalized utilitarian bargaining solutions (of which the Nash Bargaining and the utilitarian solutions are special cases). We apply the result to household decision making in the context of the Rotten Kid Theorem and in evaluating a change in family taxation.Axiomatic Bargaining, Solidarity, Transferable Utility, Family Taxation, Rotten Kid Theorem

Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions

Consider an n-person economy in which efficiency is independent of distribution but the cardinal properties of the agents’ utility functions precludes transferable utility (a property we call “Almost TU”). We show that Almost TU is a necessary and sufficient condition for all agents to either benefit jointly or suffer jointly with any change in production possibilities under well-behaved generalized utilitarian bargaining solutions (of which the Nash Bargaining and the utilitarian solutions are special cases). We apply the result to household decisionmaking in the contex of the Rotten Kid Theorem and in evaluating a change in family taxation.Axiomatic Bargaining, Solidarity, Transferable Utility, FamilyT-taxation, Rotten Kid Theorem

Share the Gain, Share the Pain? Almost Transferable Utility, Changes in Production Possibilities, and Bargaining Solutions

Consider a two-person economy in which allocative efficiency is independent of distribution but the cardinal properties of the agents' utility functions precludes transferable utility (a property I call “Almost TU”). I show that Almost TU is a necessary and sufficient condition for both agents to either benefit or to lose with any change in production possibilities under generalized utilitarian bargaining solutions (of which the Nash Bargaining solution is a special case) and under the Kalai-Smorodinsky solution. I apply the result to household decision-making in the context of the Rotten Kid Theorem and discuss other applications.Axiomatic bargaining, resource monotonicity, transferable utility, risk aversion