Bargaining Models, Feminism, And Institutionalism

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Bargaining Models, Feminism, and InstitutionalismAuthor(s): Janet A. SeizSource: Journal of Economic Issues, Vol. 29, No. 2 (Jun., 1995), pp. 609-618Published by: Association for Evolutionary EconomicsStable URL: http://www.jstor.org/stable/4226976 .Accessed: 22/09/2011 05:17

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J JOURNAL F ECONOMIC SSUESVol.XXIX No. 2 June 1995

Bargaining Models, Feminism, and Institutionalism

Janet A. Seiz

Many feminist economists have argued that neoclassical economics iswoefully inadequate for inquiry into the economic lives of women. Theneoclassical emphasis on "choice" s misleading, they say: neoclassical ac-counts tend to pay too little attention (1) to systematic differences in theoptions available to men and women and (2) to the socially constructednature of the "preferences" uiding choices. And neoclassical competitive-market-equilibrium stories misrepresent the institutional settings andprocesses that generate occupational and distributional outcomes: weneed much richer accounts with a broader range of actors and of sites andsorts of interaction. 1

Institutional economists have been advancing similar criticisms fordecades. This paper seeks to stimulate discussion of the commonalities be-tween feminist and institutionalist methodological concerns; it focusesupon assessment of one possible alternative analytical approach-game-theory-as applied to one set of phenomena, gender relations in the

household.2

The Neoclassical Unitary Household

Neoclassical work on many phenomena takes "the household" as thedecision-making unit and portrays it as seeking to maximize a unitaryhousehold utility function. The analyst usually does not explain how this

The author is Associate Professor of Economics at Grinnell College. This paper waspresented at the annual meeting of the Association for Evolutionary Economics, Washington,D.C., January 6-8, 1995. The author wishes to thank AFEE, Anne Mayhew, Ann Jennings,and discussants John Davis and Phil Mirowski.

609



610 Janet A. Seiz

function is related to the individual utility functions of household mem-bers; or Becker's [1974, 1981a, 1981b] "benevolent dictatorship" formula-tion may be cited, in which the "household's" tility function is that of analtruistic household head.

The stories told within this analytic framework have often served torationalize gender inequality. Add assumptions about differing relativeproductivities of men and women in market and nonmarket work, and onegets demonstrations that the assignment of work in the home to women,and women's resulting disadvantaged position on the labor market, arerational and welfare-maximizing.

Both neoclassical and Marxist feminists have expressed the desire foralternative accounts that show the household to be an arena of

conflictand contestation, as well as caring and cooperation, and that see primaryresponsibility for child care and housework as socially imposed on women,not "freely" hosen. There has been an interesting convergence on the partof many neoclassical and Marxist feminists toward game-theoretic ap-proaches, which, advocates argue, neglect neither social structure norhuman agency.3

Game-Theoretic Modelling of the HouseholdBargaining models begin by specifying (1) the object(s) of bargaining;

(2) the players' objectives; (3) the set of feasible outcomes and their as-sociated "payoffs" or each player; and (4) the rules by which the outcomeis to be determined.

Household members might be seen as bargaining over: the division oftasks; overall labor time and leisure; and the distribution of consumptiongoods and services (this list could be expanded). We might portray the

players as seeking to maximize individual utility.Regarding the rules for determining outcomes, game theory offers two

very different approaches.In noncooperative games (such as the Prisoners' Dilemma), the players

cannot communicate or make binding agreements. Each must choose heractions without being able to coordinate choices with the other. The gameprotocols that must be specified include (1) the options available to eachplayer at each step; (2) what determines when the game will end; (3) whateach player knows about the other's objectives, options, and knowledge;and (4) the expected payoffs associated with each action by each player,for each possible action the other player might take. In the household, anoncooperative game might have each player taking unilateral action



Bargaining Models, Feminism, and Institutionalism 611

regarding work and consumption over a number of "rounds" until a stable(equilibrium) division is achieved.

In cooperative games, in contrast, players can make binding agree-ments. The procedure for identifying a cooperative game's outcomegenerally does not involve specifying a series of individual strategicchoices. Instead, typically, the theorist specifies which of the set of pos-sible outcomes should be viewed as the optimal one, according to some setof criteria, and identifies that as the outcome the players will choose (ex-amples will be given below).

Game-theoretic work on intrahousehold allocation has so far reliedmostly on cooperative models, although some noncooperative models have

been used to analyze divorce settlements.4The situation in the household might be represented as follows. Twoindividuals are contemplating "marrying" (or remaining "married") andcooperating in production.5 How each partner's labor time is allocated,and how the goods and services they produce are distributed, are mattersfor bargaining. It is known by both how well off each partner would bewith each of the many possible divisions of tasks and consumption be-tween them, and how well off each would be outside the relationship. Bycooperating, they can increase the total availability of goods and services

for consumption, and both can benefit. But there are many possible alloca-tions of tasks and consumption that would leave both better off than theywould be on their own, and conflict exists with respect to the choiceamong these.

The factors determining each partner's maximum attainable well-being outside the relationship might include his or her (1) nonwage in-come or wealth; (2) employment opportunities and wage rates; (3) accessto support from the state, kin, etc.; and (4) expected well-being from a sub-sequent remarriage.6 The utility levels of each partner in the absence ofcooperation are referred to as the "threat point" or "fallback position." Wemight assume an individual will agree to cooperate only if cooperationleaves him/her at least as well off as he/she would be outside the relation-ship. We might also assume (less realistically, but in accordance with ra-tional-choice convention) that the partners will not choose an allocation inwhich one could be made still better off without making the other worseoff: this restricts the choice set to Pareto-optimal points.

Each partner's gain from cooperation is the difference between his/her

utility at the chosen cooperative outcome and his/her utility at the threatpoint. Thus, to specify an outcome is to say how the total gains from therelationship will be distributed. The question is, then, what determines



612 Janet A. Seiz

one's bargaining power, one's ability to have one's own ends served at theexpense of one's partner's?

The situation is analogous to (though more complex than) that of"bilateral monopoly," n which the sole buyer and the sole seller of a goodbargain over its price. Without specifying the precise bargaining process,or the particular principle for dividing the gains from marriage that thehousehold will follow, we cannot predict its outcome.7

Instead of specifying a bargaining process (as noncooperative gamesdo), cooperative models provide a set of criteria for selecting the outcome.Generally the outcome selected depends in a particular way on the "threatpoint," the theory being that one's bargaining power depends at least in

part on how well off one would be if no agreement to cooperate werereached. In the popular Nash solution, for example, the chosen outcomemaximizes the product of the players' individual gains from cooperation.8Here, if one partner's outside options improve, so that the cost of endingthe relationship declines for her, then she will get a more favorable "deal"within the relationship than she did previously.

The best-known applications of game theory to household allocationare those of Manser and Brown and McElroy and Horney.9 Considerableingenuity has been exercised in the specification of these models. Eachpartner's utility is a function of his/her own consumption of a privategood, a family-public good (e.g., housing or children, one partner's "con-sumption" of which does not reduce the quantity available to the other),and leisure. The partners may be either selfish or altruistic. And the joysof "love" or "companionship" are included via an "efficiency parameter,"according to which the utility yielded by a given quantity of consumptionor leisure is different if one is married than if one is single. 10

The gains from marriage, then, include love and companionship; theyalso include consumption gains-each partner gets more for a given level ofexpenditure than if single, because of the household public good.11 Thethreat points depend upon each partner's available wage rate and non-wage income and on the prices of the goods each consumes. The modelsare used to derive household labor supply and consumption demand func-tions. Using the Nash solution to choose the outcome makes the"household" utility function a weighted average of the partners' individualutility functions, with the relative weights of the partners' preferencesdetermined by their threat points (outside options).1

From a feminist perspective, bargaining models such as these are intwo important ways superior to unitary household models as repre-sentations of gender relations in the household. First, they render visibleboth the cooperative and the conflictual aspects of family relationships:




they can show the family to be both a cooperative unit crucial to itsmembers' well-being and a gender-inegalitarian institution. Second, thecentrality of the "threat point" in these models focuses attention on the''external" or "structural" factors that produce unequal outcomes forwomen and men.13 To explain women's and men's relative treatmentwithin the marital household, one must look at their options outside it,i.e., at their differing employment opportunities and wages, propertyownership, remarriage prospects, access to social support and state assis-tance, etc. Given gender inequalities in these "outside" actors, it is notsurprising if household "bargains" eave women working longer hours andconsuming less than men. And bargaining models imply that policies that

improve women's outside options may also improve their treatmentwithin the family.But bargaining models also have many shortcomings, two of which will

be discussed here: the choice of solutions is largely arbitrary, and thereare numerous important issues that formal models are ill suited to ad-dress.

Problem 1: The Weak Justification

for Particular Solution Concepts

Nash [1950, 1953] chose his cooperative solution-maximizing theproduct of the players' gains from cooperation-because it alone exhibitedall of four properties that he considered desirable: efficiency, symmetry,invariance to linear transformations, and independence of irrelevant al-ternatives.14 He provided no rationale in terms of rational individual ac-tion, and it is far from obvious that such an outcome would "naturally"emerge in real-life negotiations. Nash's solution is by no means ethicallyoptimal: if interpersonal utility comparisons are permitted, it gives thepartner with better outside options greater well-being within the relation-ship; and even without interpersonal comparisons, it makes outcomes adirect function of threat points, ignoring all other considerations. Further,the prediction that outcomes will be renegotiated whenever threat pointschange seems questionable. One might be receiving such a bad "deal" nthe household that a modest improvement in one's outside options wouldmake leaving the marriage more attractive than staying in it on itspresent terms; in such a case, a new "bargain" might very well be made.But if the original "deal" remains superior to one's outside prospects, adivorce threat would hardly be credible, and it would seem no new "deal"would have to be struck. 15



614 Janet A. Seiz

Other cooperative solutions besides Nash's have been offered, but theyall share this lack of "microfoundations." No doubt real-world negotiatorsare guided by some principles and conventions; but what these might bein particular times and places, and how they might be incorporated intoformal models, and to what extent the outcomes of actual negotiations areconsistent with any formal models, are matters that require much morestudy.

Noncooperative games, being more clearly based on rational individualaction, might be thought preferable. But they too exhibit considerable ar-bitrariness. The models must be severely restricted in order to generateunique equilibrium solutions: players' options must be quite limited, andstrong assumptions must be made about each player's knowledge regard-ing the other's objectives and options and knowledge. Small changes inbargaining protocols sometimes result in implausibly large changes inoutcomes. The protocols must be taken as exogenous, rather than asthemselves negotiable. And little progress has been made so far in match-ing possible protocols with observed institutional realities. Most impor-tant, game-theoretic work sometimes simply seems to be more troublethan it is worth: dauntingly complex models may produce only veryelementary, even commonsensical, statements about outcomes. 16

Problem 2: Formal Models' Incompletenessand the Need for Qualitative Work

Amartya Sen [1990] offers several important criticisms of formal bar-gaining models of the household. For one, players in bargaining modelspursue their individual self-interest, whereas in reality people may not beguided by a clear sense of their own individual welfare, instead seeing

their well-being as subsumed in that of their families. Further, allocation-al outcomes in the household should be shown to depend not only onindividuals' outside options, but also on families' "conceptions of desertand legitimacy" [1990, 134]; particularly important in determining "de-servingness," he argues, will be how much each member is perceived ascontributing to the household's well-being.

Sen suggests that analysts of the household should adopt a qualitativebargaining framework in which three relations might be expected to hold.Put most briefly, one will get a better "deal" n household allocation (1)the better one's outside options (as in the Nash model); (2) the more one'sperception of one's interests emphasizes one's individual well-being ratherthan that of others; and (3) the more one is perceived as contributing tothe family.




Sen uses this framework to explain why women so often fare poorlyrelative to men in household allocation. Women (more than men) may besocialized to identify their own well-being with that of their families. Andchildbearing and childrearing, lack of education, limited employment op-portunities, and relatively low wages all work to both worsen women'sbreakdown positions (threat points) and (given the widespread tendencyto undervalue women's work) reduce their ability to make a perceived con-tribution to the family's economic well-being. 17

In an important recent addition to feminist theory on bargaining andgender relations, Bina Agarwal [19941 argues that while employment isobviously important to women, attention also needs to be paid to thegender gap in command over productive assets (particularly land, a cru-cial determinant of well-being and empowerment in agrarian societies). 18Further, she notes that while Sen's focus on notions of "legitimacy anddesert" is important, the only such principle he discusses is rewardingfamily members according to their perceived contributions. In reality, shesuggests, families will call upon other principles of distributive justice aswell, including distribution according to "needs"; and bargaining overhousehold shares is likely to involve bargaining over distributive prin-ciples.

Agarwal [1994] also emphasizes that what is and is not bargained overrequires explanation.19 In any particular time and place, some things maysimply not be matters for (even implicit) negotiation (e.g., women'sresponsibility for child care). This may partly be a result of unequal bar-gaining power (the ultimate power, after all, is getting one's way withoutthere even being any discussion); but it is also a product of social normsconcerning rights and duties that may be internalized by household mem-bers and/or enforced by a variety of social sanctions.

While Sen and Agarwal both believe that formal models are inade-quate for explaining the intrahousehold phenomena in which feministsare interested, they both argue that a broad nonformalized bargaining ap-proach is extremely useful for such analysis.

Conclusion

In my view, it remains to be seen

1. Whether formal models can be developed that take issuessuch as social norms into account and thereby improve uponexisting models.



616 Janet A. Seiz

2. How far game theory might be able to give us new insights,as opposed to simply taking ideas long accepted by "dissident"economists and expressing them in a language respected bythe profession's mainstream.

It is clear that most of what we might wish to understand about powerrelations must be assumed in game-theoretical models; it cannot be ex-plained by them. Therefore, whether we seek to improve, to supplement,or to counter game-theoretic work, we clearly need analysis that is neitherwholly formalized nor economistic and is qualitative and historicallyspecific. Formal models must be complemented by historical investiga-tions, ethnographic work, and case studies. In such

inquiry,there is an

extremely valuable role to be played by institutionalists, with their focusupon the evolution and operation of social norms, rules, and institutionalstructures.

So institutionalists know a great deal that would be of value to gametheorists. Do the bargaining modellers have anything to offer in-stitutionalists "in exchange"? I suggest that because it keeps sight of bothstructure and agency, the broad bargaining framework provides an enor-mously promising approach to gender relations both in and outside the

household. Thinking about some aspects of social relations in terms of"bargaining" and "bargaining power" may be useful to institutionalistsand to noninstitutionalist feminists, stimulating us to explore new ques-tions and helping us to better organize our explanations.20

Notes

1. See Seiz [1992] for a survey of feminist critiques of economics.2. Seiz [1991], an earlier attempt to assess game-theoretic work, complements

this paper.3. A thoughtful Marxist-feminist discussion of these questions is Folbre [1986].4. See Ott [1992] and Anderson [1992] for surveys of game-theoretic work on

the family; the latter focuses especially on divorce. Tauchen et al. [1991] usea noncooperative model to analyze domestic violence.

5. This framework can, of course, be used to analyze allocation in a householdof same-gender partners as well as that of a heterosexual couple.

6. This last would be determined in part by the likelihood of remarriage or thetime elapsing before remarriage.

7. And if these structural particulars differ from one household to another, itwill be difflcult to define a general model.

8. The rationale for this solution will be discussed below.9. See Manser and Brown [1979, 1980], McElroy and Horney [1981, 1990], Hor-

ney and McElroy [1988], and McElroy [1990].





618 Janet A. Seiz

. A Treatise on the Family. Cambridge: Harvard University Press, 198 la.

. "Altruism in the Family and Selfishness in the Market Place." Economica 48(February 1981b): 1-15.

Folbre, Nancy. "Hearts and Spades: Paradigms of Household Economics." World Develop-ment 14, no. 2 (1986): 245-55.

Harsanyi, John C. "Bargaining." n The New Palgrave: A Dictionary of Economics, edited byJohn Eatwell, Murray Milgate, and Peter Newman. 1987. Reprinted in The NewPaigrave: Game Theory. New York: W. W. Norton and Co., 1989.

Horney, Mary Jean, and Marjorie B. McElroy. "The Household Allocation Problem: Empiri-cal Results from a Bargaining Model." Research n Population Economics 6 (1988): 15-38.

Kreps, David M. Game Theory and Economic Modeling. New York: Oxford University Press,1990.

Luce, R. Duncan, and Howard Raiffa. Games and Decisions: Introduction and Critical Sur-vey. New York: John Wiley and

Sons,1957.

Reprint, New York: Dover, 1989.Lundberg, Shelly, and Robert A. Pollak. "Separate Spheres Bargaining and the MarriageMarket." Journal of Political Economy 100, no. 6 (1993): 988-1010.

Manser, Marilyn, and Murray Brown. "Bargaining Analyses of Household Decisions." InWomen n the Labor Market, edited by Cynthia Lloyd, Emily Andrews, and Curtis L.Gilroy. New York: Columbia University Press, 1979.

"Marriage and Household Decision Making: A Bargaining Analysis." InternationalEconomic Review 21, no. 1 (1980): 3144.

McElroy, Marjorie B. "The Empirical Content of Nash-Bargained Household Behavior."Journal of Human Resources 25, no. 4 (1990): 559-83.

McElroy, Marjorie B., and Mary Jean Horney. "Nash-Bargained Household Decisions:

Toward a Generalization of the Theory of Demand." nternational Economic Review 22,no. 2 (1981): 33349.. "Nash-Bargained Household Decisions: Reply." nternational Economic Review 31,

no. 1 (1990): 23742.Nash, John. "The Bargaining Problem." Econometrica 18 (1950): 155-62.

. "Two Person Cooperative Games." Econometrica 21 (1953): 12840.Ott, Notburga. Intrafamily Bargaining and Household Decisions. New York: Springer-Ver-

lag, 1992.Seiz, Janet A. "The Bargaining Approach and Feminist Methodology." Review of Radical

Political Economics 23, nos. 1 and 2 (1991): 22-29.. "Gender and Economic Research." In Post-Popperian Methodology of Economics:

Recovering Practice, edited by Neil de Marchi. Boston: Kluwer, 1992.Sen, Amartya K. "Gender and Cooperative Conflicts." n Persistent Inequalities: Women andWorld Development, edited by Irene Tinker. New York: Oxford University Press, 1990.

Tauchen, Helen V., Ann Dryden Witte, and Sharon K. Long. "Domestic Violence: A Nonran-dom Affair." nternational Economic Review 32, no. 2 (1991): 491-511.

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Bargaining Models, Feminism, And Institutionalism