Weakening transferable utility: the case of non-intersecting Pareto curves

Demuynck, Thomas and Potoms, Tom (2018) Weakening transferable utility: the case of non-intersecting Pareto curves. Working Paper. ECARES, Belgium.

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Transferable utility (TU) is a widely used assumption in economics. In this paper, we weaken the TU property to a setting where distinct Pareto frontiers have empty intersections. We call this the no-intersection property (NIP). We show that the NIP is strictly weaker than TU, but still allows to derive several desirable properties. We discuss the NIP in relation to several models where TU has turned out to be a key as- sumption: models of assortative matching, principal-agent models with asymmetric information, the Coase Independence Property and Becker’s Rotten Kid Theorem.

Item Type: Reports and working papers (Working Paper)
Keywords: Pareto efficiency;Transferable utility;Assortative matching;Coase Independence Property;Rotten Kids Theorem
Schools and Departments: University of Sussex Business School > Economics
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Date Deposited: 07 Feb 2020 08:51
Last Modified: 07 Feb 2020 08:51
URI: http://sro.sussex.ac.uk/id/eprint/89784

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