The bargaining model of depression

Minor depression—low mood often accompanied by a loss of motivation—is almost certainly an adaptation to circumstances that, in ancestral environments, imposed a fitness cost. It is, in other words, the psychic equivalent of physical pain. Major depression is characterized by additional symptoms—such as loss of interest in virtually all activities and suicidality—that have no obvious utility. The frequent association of these severe and disabling symptoms with apparently functional symptoms like sadness and low mood challenges a functional account of depression as a whole. Given that the principle cause of major unipolar depression is a significant negative life event, and that its characteristic symptom is a loss of interest in virtually all activities, it is possible that this syndrome functions somewhat like a labor strike. When powerful others are benefiting from an individual’s efforts, but the individual herself is not benefiting, she can, by reducing her productivity, put her value to them at risk in order to compel their consent and assistance in renegotiating the social contract so that it will yield net fitness benefits for her. In partial support of this hypothesis, depression is associated with the receipt of considerable social benefits despite the negative reaction it causes in others

An experimental test of Rubinstein's bargaining model

This paper offers an experimental test of a version of Rubinstein’s bargaining model in which the players’ discount factors are unequal. We find that learning, rationality, and fairness are all significant in determining the outcome. In particular, we find that a model of myopic optimization over time predicts the sign of deviations in the opening proposal from the final undiscounted agreement in the previous period rather well. To explain the amplitude of the deviations, we then successfully fit a perturbed version of the model of myopic adjustment to the data that allows for a bias toward refusing inequitable offers

A bargaining model of financial intermediation

Investment;Bargaining;Financial Institutions

A Bargaining Model of Tax Competition

This paper develops a model in which competing governments offer financial incentives to individual firms to induce the firms to locate within their jurisdictions. Equilibrium is described under three specifications of the supplementary taxes. There is no misallocation of capital under two of these specifications, and there might or might not be capital misallocation under the third. This result contrasts strongly with that of the standard tax competition model, which does not allow governments to treat firms individually. That model almost always finds that competition among governments leads to the misallocation of capital.

Nash bargained consumption decisions: a revealed preference analysis.

We present a revealed preference analysis of the testable implications of the Nash bargaining solution. Our specific focus is on a two-player game involving consumption decisions. We consider a setting in which the empirical analyst has information on both the threat points bundles and the bargaining outcomes. We first establish a revealed preference characterization of the Nash bargaining solution. This characterization implies conditions that are both necessary and sufficient for consistency of observed consumption behavior with the Nash bargaining model. However, these conditions turn out to be nonlinear in unknowns and therefore difficult to verify. Given this, we subsequently present necessary conditions and sufficient conditions that are linear (and thus easily testable). We illustrate the practical usefulness of these conditions by means of an application to experimental data. Such an experimental setting implies a most powerful analysis of the empirical goodness of the Nash bargaining model for describing consumption decisions. To our knowledge, this provides a first empirical test of the Nash bargaining model on consumption data. Finally, we consider the possibility that threat point bundles are not observed. This obtains testable conditions for the Nash bargaining model that can be used in non-experimental (e.g. household consumption) settings, which often do not contain information on individual consumption bundles in threat points.

Nash bargained consumption decisions: a revealed preference analysis

We present a revealed preference analysis of the testable implications of the Nash bargaining solution. Our specific focus is on a two-player game involving consumption decisions. We consider a setting in which the empirical analyst has information on both the threat points bundles and the bargaining outcomes. We first establish a revealed preference characterization of the Nash bargaining solution. This characterization implies conditions that are both necessary and sufficient for consistency of observed consumption behavior with the Nash bargaining model. However, these conditions turn out to be nonlinear in unknowns and therefore difficult to verify. Given this, we subsequently present necessary conditions and sufficient conditions that are linear (and thus easily testable). We illustrate the practical usefulness of these conditions by means of an application to experimental data. Such an experimental setting implies a most powerful analysis of the empirical goodness of the Nash bargaining model for describing consumption decisions. To our knowledge, this provides a first empirical test of the Nash bargaining model on consumption data. Finally, we consider the possibility that threat point bundles are not observed. This obtains testable conditions for the Nash bargaining model that can be used in non-experimental (e.g. household consumption) settings, which often do not contain information on individual consumption bundles in threat points.

A General Bargaining Model of Legislative Policy-making

We present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space. In contrast to other bargaining models, the status quo is not assumed to be bad for all legislators, and delay may be Pareto efficient. We prove existence of stationary equilibria. We show that if all legislators are risk averse or if even limited transfers are possible, then delay is only possible if the status quo lies in the core. Thus, we expect immediate agreement in multidimensional models, where the core is typically empty. In one dimension, delay is possible if and only if the status quo lies in the core of the voting rule, and then it is the only possible outcome. Our comparative statics analysis yield two noteworthy insights: moderate status quos imply moderate policy outcomes, and legislative patience implies policy moderation

Distribution and Globalization: A Wage Bargaining Model

This paper develops a model of distribution to analyze the effects of neoliberal globalization on labor in the developing countries. Distribution is determined via wage bargaining by workers, price setting by firms, and improvements in productivity. The full model has the nature of a Post-Keynesian conflicting claims model for an open economy under the pressure of globalization. The conflict inflation is extended to an open economy case with imported inputs, where the pass through effect of the depreciation of the local currency also becomes important. The variables that reflect the macroeconomic effects of globalization are modeled as parameters that affect the bargaining power of labor on two levels: the first group is related with the interaction with the global economy, i.e. international trade, and FDI. The second is about the domestic fiscal and monetary policy variables, which are particularly related to the specific form that globalization takes in the era of neoliberalism, i.e. government expenditures, and the interest rate. Then the model is solved for distribution of income, i.e. the wage share, thus a reduced form of the model is obtained, which is estimated in a companion paper to test whether the change in the international and domestic macroeconomic environment has affected the decline the labor’s share.Labor’s share, neoliberal policies, globalization

Does the Balance of Power Within a Family Matter? The Case of the Retirement Equity Act

This paper studies within-family decision making regarding investment in income protection for surviving spouses. A change in US pension law (the Retirement Equity Act of 1984) is used as an instrument to derive predictions both from a simple Nash-bargaining model of the household and from the classical single-utility-function model of the household. This law change gave spouses of married pension-plan participants the right to survivor benefits unless they explicitly waived this right. The predictions of the classical model are rejected in favor of the predictions of the Nash-bargaining model in the data.