Monotonicity properties of bargaining solutions when applied to economics (Q1115821)

This paper is concerned with the monotonicity properties of bargaining solutions applied to economic problems of fair division. In particular, let there be an aggregate endowment \(\Omega\) of \(\ell\) commodities, on which all agents have ``equal rights''. Suppose there is an increase in \(\Omega\). The question is then whether all agents will benefit from such an increase in \(\Omega\). The authors' main results can be summarized as follows. The Nash and Kalai-Smorodinsky solutions are strongly monotonic in the two-person case if \(\ell =1\). However, these solutions lose this property for any \(\ell \geq 2\). The Perles-Maschler solution is not strongly monotonic even if \(\ell =1.\) Similar results are obtained for two related but weaker properties: ``individual monotonicity'' and ``weak monotonicity''. These properties pertain to situations in which expansions in the feasible set are constrained, as would happen if agents were initially satiated. The final property studied is ``population monotonicity''. It says that when an increase in population size, unaccompanied by an increase in resources, occurs, all of the agents originally present share the burdens of supporting the newcomers. The authors show that the Nash solution behaves well if \(\ell =1\), but not for any \(\ell \geq 2\).