Bargaining in economic and ethical environments. An experimental study and normative solution concepts (Q1815563)

This monograph is a synthesis of empirical work and theoretical analysis in the area of bargaining theory. In the first half of the book, an experimental study on bargaining behaviour in different environments is presented. Environment has to be interpreted as an embedding which goes beyond a consideration of pure utility vectors in utility space. The latter is an approach that Nash (1950), Raiffa (1953) and Kalai and Smorodinski (1975), among many others, followed in their axiomatic analyses. Roemer raised serious objections against the informational parsimony in this type of welfaristic approach, arguing that in various bargaining situations rights or ethical norms are of importance, and these cannot be adequately reflected in the utility vector representing the status quo point. In her experimental study, the author varies the economic and ethical environment successively. The author introduces, among other aspects, asymmetries in the payoffs players can achieve, an aspect of productivity or desert and an aspect of needs. All this is done in order to answer the following questions: (a) Which principles do the subjects apply dependent on their bargaining position? (b) How do the applied principles and agreements depend on the economic or ethical environment of the experiment? (c) How does the agreement depend on these principles? Given the observations from the experiments, the second half of the monograph presents various theoretical formulations of non-welfaristic normative bargaining solutions. In the reviewer's opinion, the main contribution in this part of the book is the author's goal function approach. Players formulate their goals. These depend on the ethical and economic environment of the situation, because the latter has an influence on what the players consider as a justifiable and acceptable distributive rule. In some sense, the author's goal point in utility space is close to Kalai-Smorodinski's ideal point, but note again that the goal determination is based on a ``rich'' environment. Within her goal function approach, the author gives two types of axiomatic characterizations for bargaining solutions; these are proportional in character. One uses a monotonicity axiom, the other an equity axiom in concessions. The theoretical part of the monograph contains another solution concept which is quite different from the goal function approach. Here, the players agree to maximize a collective gain first and then enter a process of redistribution.