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Weakening Transferable Utility: the Case of Non-intersecting Pareto Curves

par Demuynck, Thomas ;Potoms, Tom
Référence Journal of Economics Theory, 188
Publication Publié, 2020-04-01

Article révisé par les pairs

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Résumé :

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 assumption: models of assortative matching, principal-agent models with asymmetric information, the Coase Independence Property and Becker's Rotten Kid Theorem.