Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/235647
Authors: 
Bester, Helmut
Year of Publication: 
2021
Series/Report no.: 
Diskussionsbeiträge No. 2021/11
Abstract: 
This paper analyzes fairness and bargaining in a dynamic bilateral matching market. Traders from both sides of the market are pairwise matched to share the gains from trade. The bargaining outcome depends on the traders' fairness attitudes. In equilibrium fairness matters because of market frictions. But, when these frictions become negligible, the equilibrium approaches theWalrasian competitive equilibrium, independently of the traders' inequity aversion. Fairness may yield a Pareto improvement; but also the contrary is possible. Overall, the market implications of fairness are very different from its effects in isolated bilateral bargaining.
Subjects: 
Fairness
inequity aversion
bargaining
ultimatum game
matching market
search costs
competitive equilibrium
JEL: 
C78
D5
D6
D83
D9
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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