Disagreement point monotonicity, transfer responsiveness, and the egalitarian bargaining solution

Abstract

This paper provides an axiomatization of the egalitarian bargaining solution. The central axiom used (together with some standard properties of bargaining solutions) in this characterization is a transfer responsiveness condition. First, it ensures that no transfer paradox can occur if bargaining power is transferred from one agent to another by decreasing one agent's and increasing the other agent's component of the disagreement point. Second, the extent of external effects of such a transfer is limited by requiring that agents not involved in the transfer neither gain more than the “winner” nor lose more than the “loser” of the transfer. Journal of Economic Literature Classification No.: C78.