Relative Disagreement-Point Monotonicity of Bargaining Solutions

Prominent bargaining solutions are disagreement-point monotonic. These solutions’ disagreement-point monotonicity ranking, on the other hand, is impossible to establish. In a large class of bargaining problems, however, a ranking of the relative disagreement-point monotonicity of these prominent bargaining solutions can be obtained. Using the ‘Constant Elasticity of Substitution’ class of bargaining problems, and regardless of the concavity of the Pareto frontier and of the increase in the disagreement point, we find that the Egalitarian solution is most monotonic with respect to changes in disagreement payoffs, followed by the Nash solution. The Equal Sacrifice solution turns out to be the least monotonic, followed by the Kalai/Smorodinsky solution.The Nash solution, the Kalai/Smorodinsky solution, the Egalitarian solution, the Equal Sacrifice solution, Relative Disagreement-Point Monotonicity.

Finite Alternating-Move Arbitration Schemes and the Equal Area Solution

We start by considering the Alternate Strike (AS) scheme, a real-life arbitration scheme where two parties select an arbitrator by alternately crossing off at each round one name from a given panel of arbitrators. We find out that the AS scheme is not invariant to “bad” alternatives. We then consider another alternating-move scheme, the Voting by Alternating Offers and Vetoes (VAOV) scheme, which is invariant to bad alternatives. We fully characterize the subgame perfect equilibrium outcome sets of these above two schemes in terms of the rankings of the parties over the alternatives only. We also identify some of the typical equilibria of these above two schemes. We then analyze two additional alternating-move schemes in which players’ current proposals have to either honor or enhance their previous proposals. We show that the first scheme’s equilibrium outcome set coincides with that of the AS scheme, and the equilibrium outcome set of the second scheme coincides with that of the VAOV scheme. Finally, it turns out that all schemes’ equilibrium outcome sets converge to the Equal Area solution’s outcome of cooperative bargaining problem, if the alternatives are distributed uniformly over the comprehensive utility possibility set and as the number of alternatives tends to infinity.The Federal Mediation and Conciliation Service (FMCS), the Alternate Strike (AS) scheme, the Voting by Alternating Offers and Vetoes (VAOV) scheme, the Enhancing Past Concessions scheme, the Honoring Past Concessions scheme, the Equal Area solution.

CADAVERIC VS. LIVE-DONOR KIDNEY TRANSPLANTS: THE INTERACTION OF INSTITUTIONS AND INEQUALITY

“In 1991, the World Health Assembly approved a set of Guiding Principles which emphasize voluntary donation, non-commercialization and a preference for cadavers over living donors” (World Health Organization). We investigate whether factors such as inequality, rule of law and religion have any effect on the ratio of cadaveric transplants to all transplants. Using an unbalanced annual dataset from 64 countries over 1993-2004, we show particularly for developing countries that an improvement in equality and rule of law encourage cadaveric kidney transplants. Religion also plays an important role in that relationship.

Division Rules, Network Formation, and the Evolution of Wealth

We start with an initial wealth distribution. Each agent may establish at most one link with any agent in each period, yielding a surplus that agents split according to a uniform division rule. Wealth evolves by adding the payoffs to current wealth. Many long-run wealth distributions can arise, depending on the division rule and initial wealth distribution. The richest agent may remain richest or the poorest may become rich. Examing several division rules, we find that two factors determine the long-run wealth distribution: the size of the gain from a link, and the incentive to link to rich or poor.Network formation, long-run wealth distribution

Nash Demand Game and the Kalai-Smorodinsky Solution

We introduce two new variations on the Nash demand game. One, like all known Nash-like demand games so far, has the Nash solution outcome as its equilibrium outcome. In the other, the range of solutions depends on an exogenous breakdown probability; surprisingly, the Kalai-Smorodinsky outcome proves to be the most robust equilibrium outcome. While the Kalai-Smorodinsky solution always finishes on top, there is no possible general ranking among the remaining solution concepts considered; in fact, the rest of the solution concepts take their turns at the bottom at various bargaining problems, depending on the specifics of the bargaining setup.Nash demand game, Kalai-Smorodinsky Solution.

Endogenous Liberalization and Within-Country Inequality: A Theoretical and Empirical Analysis

We theoretically model and empirically investigate a societyâs liberalization decision and its impact on income inequality. The motivation is that a blanket conclusion that globalization increases inequality within countries can be misleading. In the paper, the decision of the society rests on the pre- and post-liberalization utilities of different segments, and, complying with stylized facts, the economyâs structure follows Kuznetsâ predictions on industrialization and urbanization. Our findings support the line of research which emphasizes the importance of country-specific factors in prescribing policies. In particular, countries are more likely to open up when relative productivity of migrant ex-rural workers to those of initial urban workers in manufacturing, β, is high, and the societyâs tastes for the agricultural goods, α, are not particularly strong. Following liberalization, the income distribution too improves if α is low and β is high. Empirical results show that open economies, ceteris paribus, have 3- 4 higher Gini points than closed economies. In developing countries except Sub-saharan Africa, β can offset this stand-alone effect just after the switch if the switch is made with a minimum β value of 0.67 â 0.89, while in Sub-saharan Africa, this standalone effect can be offset in 10-15 years after the switch. Overall, however, the β effect cannot surpass the stand-alone effect in the whole sample, which implies that the median country has made a âwrongâ switch.Liberalization, Industrialization, Income Inequality, Political Economy

Socially Beneficial Mergers: A New Class of Concentration Indices

The prominent Herfindahl-Hirschman index (HHI), yields a higher concentration level in response to any merger between firms, implying that any merger will decrease the social welfare. Although HHI is used by the Anti-trust Division of the U.S. Department of Justice (AD-DoJ), its merger implications are not fully embraced by the anti-trust authorities. We propose a class of concentration indices that is in line with the spirit of the AD-DoJ’s merger policies and consider different theoretical models which indicate that the AD-DoJ is justified in allowing mergers especially among smaller firms, as they counter the market power of dominant firms.Horizontal Mergers, Industry Concentration, the Anti-Trust Division, Hirfindahl-Hirschman Index (HHI), Dominant Firm(s)

Speed Discounting and Racial Disparities: Evidence from Speeding Tickets in Boston

Law enforcement officers are allowed to exercise a significant amount of street-level discretion in a variety of ways. In this paper, we focus on a particular prominent kind of discretionary behavior by traffic officers when issuing speeding tickets, speed discounting. Officers partially forgive motorists by writing a lower speed level than the speed that officers observe. Verifying the level of speed discounting by different groups of officers and motorists and ascertaining the presence of racial disparities in this lenient policing are the main objectives of this paper. We find that minority officers, particularly African-Americans, are harsher on all motorists but even harsher on minority motorists regarding speed discounting. The minority-on-minority disparity appears to be stronger in situations involving Hispanic officers, infrequently ticketing officers, male motorists, those driving old vehicles, and minority neighborhoods.police discretion, disparate treatment, racial bias, speeding tickets

Bargaining with random arbitration: an experimental study

We use a laboratory experiment to study bargaining in the presence of random arbitration. Two players make simultaneous demands; if compatible, each receives the amount demanded as in the standard Nash demand game. If bargainers’ demands are incompatible, then rather than bargainers receiving their disagreement payoffs with certainty, they receive them only with exogenous probability 1−q. With probability q, there is random arbitration instead, with one bargainer randomly selected to receive his/her demand and the other bargainer receiving the remainder. The bargaining set is asymmetric, with one bargainer favoured over the other. We set disagreement payoffs to zero, and vary q over several values ranging from zero to one. Our main experimental results support the directional predictions of standard game theory (though the success of its point predictions is mixed). In the spirit of typical results for conventional arbitration, we observe a strong chilling effect on bargaining for values of q near one, with extreme demands and low agreement rates in these treatments. For the most part, increases in q reinforce the built-in asymmetry of the game, further benefiting the favoured player at the expense of the unfavoured player. The effects we find are non-uniform in q: over some fairly large ranges, increases in q have minimal effect on bargaining outcomes, but for other values of q, a small additional increase in q leads to sharp changes in results.Nash demand game, random arbitration, chilling effect, equilibrium selection,experiment.

How sensitive are bargaining outcomes to changes in disagreement payoffs?

We use a human–subjects experiment to investigate how bargaining outcomes are affected by changes in bargainers’disagreement payoffs. Subjects bargain against changing opponents, with an asymmetric disagreement outcome that varies over plays of the game. Both bargaining parties are informed of both disagreement payoffs (and the cake size) prior to bargaining. We find that bargaining outcomes do vary with the disagreement outcome, but subjects severely under–react to changes in their own disagreement payoff and to changes in the opponent’s disagreement payoff, relative to the risk–neutral prediction. This effect is observed in a standard Nash demand game and a related unstructured bargaining game, and for two different cake sizes varying by a factor of four. We show theoretically that standard models of expected utility maximisation are unable to account for this under–responsiveness – even when risk aversion is introduced. We also show that other–regarding preferences can explain our main results.Nash demand game, unstructured bargaining, disagreement, experiment, risk aversion, social preference, other–regarding behaviour, bargaining power.