Econometrica: May, 1989, Volume 57, Issue 3

A Concept of Egalitarianism Under Participation Constraints

https://doi.org/0012-9682(198905)57:3<615:ACOEUP>2.0.CO;2-#
p. 615-635

Bhaskar Dutta, Debraj Ray

We define a new solution concept for transferable utility cooperative games in characteristic function form, in a framework where individuals believe in equality as a desirable social goal, although private preferences dictate selfish behavior. This latter aspect implies that the solution outcome(s) must satisfy core-like participation constraints while the concern for equality entails choice of Lorenz maximal elements from within the set of payoffs satisfying the participation constraints. Despite the Lorenz domination relation being a partial ranking, we show that the egalitarian solution is unique whenever it exists. Moreover, for convex games, the solution is in the core and Lorenz dominates every other core allocation.