Bargaining Models, Feminism, and Institutionalism Author(s): Janet A. Seiz Source: Journal of Economic Issues, Vol. 29, No.

2 (Jun., 1995), pp. 609-618 Published by: Association for Evolutionary Economics Stable URL: http://www.jstor.org/stable/4226976 . Accessed: 22/09/2011 05:17
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ISSUES JOURNAL ECONOMIC OF Vol. XXIX No.2 June1995

Bargaining Models, Feminism, and Institutionalism

Janet A. Seiz

Many feminist economists have argued that neoclassical economics is woefully inadequate for inquiry into the economic lives of women. The is neoclassical emphasis on "choice" misleading, they say: neoclassical accounts tend to pay too little attention (1) to systematic differences in the options available to men and women and (2) to the socially constructed nature of the "preferences" guiding choices. And neoclassical competitivemarket-equilibrium stories misrepresent the institutional settings and processes that generate occupational and distributional outcomes: we need much richer accounts with a broader range of actors and of sites and sorts of interaction.1 Institutional economists have been advancing similar criticisms for decades. This paper seeks to stimulate discussion of the commonalities between feminist and institutionalist methodological concerns; it focuses upon assessment of one possible alternative analytical approach-gametheory-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 the decision-making unit and portrays it as seeking to maximize a unitary household utility function. The analyst usually does not explain how this
The author is Associate Professor of Economics at Grinnell College. This paper was presented at the annual meeting of the Association for EvolutionaryEconomics, Washington, D.C., January 6-8, 1995. The author wishes to thank AFEE, Anne Mayhew,Ann Jennings, and discussants John Davis and Phil Mirowski.

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function is related to the individual utility functions of household members; or Becker's [1974, 1981a, 1981b] "benevolent dictatorship"formulation may be cited, in which the "household's" utility function is that of an altruistic household head. The stories told within this analytic framework have often served to rationalize gender inequality. Add assumptions about differing relative productivities of men and women in market and nonmarket work, and one gets demonstrations that the assignment of work in the home to women, and women's resulting disadvantaged position on the labor market, are rational and welfare-maximizing. Both neoclassical and Marxist feminists have expressed the desire for alternative accounts that show the household to be an arena of conflict and contestation, as well as caring and cooperation, and that see primary responsibility for child care and housework as socially imposed on women, not "freely" chosen. There has been an interesting convergence on the part of many neoclassical and Marxist feminists toward game-theoretic approaches, which, advocates argue, neglect neither social structure nor human agency.3 Game-Theoretic Modelling of the Household Bargaining models begin by specifying (1) the object(s) of bargaining; (2) the players' objectives; (3) the set of feasible outcomes and their associated "payoffs" each player; and (4) the rules by which the outcome for is to be determined. Household members might be seen as bargaining over: the division of tasks; overall labor time and leisure; and the distribution of consumption goods 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 noncooperativegames (such as the Prisoners' Dilemma), the players cannot communicate or make binding agreements. Each must choose her actions without being able to coordinate choices with the other. The game protocols that must be specified include (1) the options available to each player at each step; (2) what determines when the game will end; (3) what each 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, a noncooperative game might have each player taking unilateral action

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until a stable regarding work and consumption over a number of "rounds" (equilibrium) division is achieved. In cooperative games, in contrast, players can make binding agreements. The procedure for identifying a cooperative game's outcome generally does not involve specifying a series of individual strategic choices. Instead, typically, the theorist specifies which of the set of possible outcomes should be viewed as the optimal one, according to some set of criteria, and identifies that as the outcome the players will choose (examples will be given below). Game-theoretic work on intrahousehold allocation has so far relied mostly on cooperative models, although some noncooperative models have been used to analyze divorce settlements.4 The situation in the household might be represented as follows. Two individuals are contemplating "marrying"(or remaining "married")and cooperating in production.5 How each partner's labor time is allocated, and how the goods and services they produce are distributed, are matters for bargaining. It is known by both how well off each partner would be with each of the many possible divisions of tasks and consumption between them, and how well off each would be outside the relationship. By cooperating, they can increase the total availability of goods and services for consumption, and both can benefit. But there are many possible allocations of tasks and consumption that would leave both better off than they would be on their own, and conflict exists with respect to the choice among these. The factors determining each partner's maximum attainable wellbeing outside the relationship might include his or her (1) nonwage income or wealth; (2) employment opportunities and wage rates; (3) access to support from the state, kin, etc.; and (4) expected well-being from a subsequent remarriage.6 The utility levels of each partner in the absence of cooperation are referred to as the "threat point"or "fallbackposition."We might assume an individual will agree to cooperate only if cooperation leaves him/her at least as well off as he/she would be outside the relationship. We might also assume (less realistically, but in accordance with rational-choice convention) that the partners will not choose an allocation in which one could be made still better off without making the other worse off: 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 threat point. Thus, to specify an outcome is to say how the total gains from the relationship will be distributed. The question is, then, what determines

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one's bargaining power, one's ability to have one's own ends served at the expense of one's partner's? The situation is analogous to (though more complex than) that of "bilateral monopoly,"in which the sole buyer and the sole seller of a good bargain over its price. Without specifying the precise bargaining process, or the particular principle for dividing the gains from marriage that the household will follow, we cannot predict its outcome.7 Instead of specifying a bargaining process (as noncooperative games do), cooperative models provide a set of criteria for selecting the outcome. Generally the outcome selected depends in a particular way on the "threat point," 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 were reached. In the popular Nash solution, for example, the chosen outcome maximizes the product of the players' individual gains from cooperation.8 Here, if one partner's outside options improve, so that the cost of ending the 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 allocation are those of Manser and Brown and McElroy and Horney.9 Considerable ingenuity has been exercised in the specification of these models. Each partner's utility is a function of his/her own consumption of a private good, a family-public good (e.g., housing or children, one partner's "consumption" of which does not reduce the quantity available to the other), and leisure. The partners may be either selfish or altruistic. And the joys of "love"or "companionship"are included via an "efficiency parameter," according to which the utility yielded by a given quantity of consumption or leisure is different if one is married than if one is single. 10 The gains from marriage, then, include love and companionship; they also include consumption gains-each partner gets more for a given level of expenditure than if single, because of the household public good.11 The threat points depend upon each partner's available wage rate and nonwage income and on the prices of the goods each consumes. The models are used to derive household labor supply and consumption demand functions. Using the Nash solution to choose the outcome makes the "household" utility function a weighted average of the partners' individual utility functions, with the relative weights of the partners' preferences determined by their threat points (outside options).1 From a feminist perspective, bargaining models such as these are in two important ways superior to unitary household models as representations of gender relations in the household. First, they render visible both the cooperative and the conflictual aspects of family relationships:

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they can show the family to be both a cooperative unit crucial to its members' well-being and a gender-inegalitarian institution. Second, the centrality of the "threat point" in these models focuses attention on the ''external" or "structural" factors that produce unequal outcomes for women and men.13 To explain women's and men's relative treatment within the marital household, one must look at their options outside it, i.e., at their differing employment opportunities and wages, property ownership, remarriage prospects, access to social support and state assistance, etc. Given gender inequalities in these "outside"factors, it is not leave women working longer hours and surprising if household "bargains" consuming less than men. And bargaining models imply that policies that improve women's outside options may also improve their treatment within the family. But bargaining models also have many shortcomings, two of which will be discussed here: the choice of solutions is largely arbitrary, and there are numerous important issues that formal models are ill suited to address. Problem 1: The Weak Justification for Particular Solution Concepts Nash [1950, 1953] chose his cooperative solution-maximizing the product of the players' gains from cooperation-because it alone exhibited all of four properties that he considered desirable: efficiency, symmetry, invariance to linear transformations, and independence of irrelevant alternatives.14 He provided no rationale in terms of rational individual action, and it is far from obvious that such an outcome would "naturally" emerge in real-life negotiations. Nash's solution is by no means ethically optimal: if interpersonal utility comparisons are permitted, it gives the partner with better outside options greater well-being within the relationship; and even without interpersonal comparisons, it makes outcomes a direct function of threat points, ignoring all other considerations. Further, the prediction that outcomes will be renegotiated whenever threat points change seems questionable. One might be receiving such a bad "deal"in the household that a modest improvement in one's outside options would make leaving the marriage more attractive than staying in it on its present 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, a divorce threat would hardly be credible, and it would seem no new "deal" would have to be struck.15

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Other cooperative solutions besides Nash's have been offered, but they No all share this lack of "microfoundations." doubt real-world negotiators are guided by some principles and conventions; but what these might be in particular times and places, and how they might be incorporated into formal models, and to what extent the outcomes of actual negotiations are consistent with any formal models, are matters that require much more study. Noncooperative games, being more clearly based on rational individual action, might be thought preferable. But they too exhibit considerable arbitrariness. The models must be severely restricted in order to generate unique equilibrium solutions: players' options must be quite limited, and strong assumptions must be made about each player's knowledge regarding the other's objectives and options and knowledge. Small changes in bargaining protocols sometimes result in implausibly large changes in outcomes. The protocols must be taken as exogenous, rather than as themselves negotiable. And little progress has been made so far in matching possible protocols with observed institutional realities. Most important, game-theoretic work sometimes simply seems to be more trouble than it is worth: dauntingly complex models may produce only very elementary, even commonsensical, statements about outcomes.16 Problem 2: Formal Models' Incompleteness and the Need for Qualitative Work Amartya Sen [1990] offers several important criticisms of formal bargaining models of the household. For one, players in bargaining models pursue their individual self-interest, whereas in reality people may not be guided by a clear sense of their own individual welfare, instead seeing their well-being as subsumed in that of their families. Further, allocational outcomes in the household should be shown to depend not only on individuals' outside options, but also on families' "conceptions of desert and legitimacy" [1990, 134]; particularly important in determining "deservingness," he argues, will be how much each member is perceived as contributing to the household's well-being. Sen suggests that analysts of the household should adopt a qualitative bargaining framework in which three relations might be expected to hold. Put most briefly, one will get a better "deal"in household allocation (1) the better one's outside options (as in the Nash model); (2) the more one's perception of one's interests emphasizes one's individual well-being rather than that of others; and (3) the more one is perceived as contributing to the family.

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Sen uses this framework to explain why women so often fare poorly relative to men in household allocation. Women (more than men) may be socialized to identify their own well-being with that of their families. And childbearing and childrearing, lack of education, limited employment opportunities, and relatively low wages all work to both worsen women's breakdown positions (threat points) and (given the widespread tendency to undervalue women's work) reduce their ability to make a perceived contribution to the family's economic well-being.17 In an important recent addition to feminist theory on bargaining and gender relations, Bina Agarwal [19941 argues that while employment is obviously important to women, attention also needs to be paid to the gender gap in command over productive assets (particularly land, a crucial determinant of well-being and empowerment in agrarian societies). 18 Further, she notes that while Sen's focus on notions of "legitimacy and desert" is important, the only such principle he discusses is rewarding family members according to their perceived contributions. In reality, she suggests, families will call upon other principles of distributive justice as well, including distribution according to "needs";and bargaining over household shares is likely to involve bargaining over distributive principles. Agarwal [1994] also emphasizes that what is and is not bargained over requires explanation.19In any particular time and place, some things may simply not be matters for (even implicit) negotiation (e.g., women's responsibility for child care). This may partly be a result of unequal bargaining power (the ultimate power, after all, is getting one's way without there even being any discussion); but it is also a product of social norms concerning rights and duties that may be internalized by household members and/or enforced by a variety of social sanctions. While Sen and Agarwal both believe that formal models are inadequate for explaining the intrahousehold phenomena in which feminists are interested, they both argue that a broad nonformalizedbargaining approach is extremely useful for such analysis. Conclusion In my view, it remains to be seen 1. Whether formal models can be developed that take issues such as social norms into account and thereby improve upon existing models.

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Janet A. Seiz 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 by the profession's mainstream.

It is clear that most of what we might wish to understand about power relations must be assumed in game-theoretical models; it cannot be explained by them. Therefore, whether we seek to improve, to supplement, or to counter game-theoretic work, we clearly need analysis that is neither wholly formalized nor economistic and is qualitative and historically specific. Formal models must be complemented by historical investigations, ethnographic work, and case studies. In such inquiry, there is an extremely valuable role to be played by institutionalists, with their focus upon the evolution and operation of social norms, rules, and institutional structures. So institutionalists know a great deal that would be of value to game theorists. Do the bargaining modellers have anything to offer institutionalists "in exchange"?I suggest that because it keeps sight of both structure and agency, the broad bargaining framework provides an enormously 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 institutionalists and to noninstitutionalist feminists, stimulating us to explore new questions and helping us to better organize our explanations.20
Notes
1. 2. 3. 4. 5. 6. 7. 8. 9. See Seiz [1992] for a survey of feminist critiques of economics. Seiz [1991], an earlier attempt to assess game-theoretic work, complements this paper. A thoughtful Marxist-feminist discussion of these questions is Folbre[ 1986]. 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] use a noncooperativemodel to analyze domesticviolence. This framework can, of course, be used to analyze allocation in a household of same-gender partners as well as that of a heterosexual couple. This last would be determined in part by the likelihood of remarriage or the time elapsing before remarriage. And if these structural particulars differ from one household to another, it will be difflcult to define a general model. The rationale for this solution will be discussed below. See Manser and Brown [1979, 1980], McElroyand Horney [1981, 1990], Horney and McElroy[ 1988], and McElroy[ 1990].

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10. In Tauchen et al. [1991], a noncooperativemodel, the utility functions also include violence: the dominant partner may exercise violence, which both yields him satisfaction directly and induces his partner to behave in ways that increase satisfaction. If the models specified a household productionfunction with benefits to taskspecialization, this additional productivitywould be another benefit of cooperation. McElroyand Horney employ the Nash cooperativesolution only; Manser and Brown examine the Nash solution and two others, the Kalai-Smorodinsky solution and a "dictatorial" outcome. McElroy[1990] is eloquent on this virtue of the Nash household model. For details, see Luce and Raiffa [1957] and Harsanyi [1987]. Some theorists have posited alternative "threat points" that do not involve solution within divorce. Lundbergand Pollak [19931have a "noncooperative" the marriage, in which the partners revert to a division of labor defined by traditional gender roles. One prominent practitioner and popularizer of game theory has suggested that its "majorsuccesses have come primarily from formalizing commonsense intuition in ways that allow analysts to see how such intuitions can be applied in fresh contexts and permit analysts to explore intuition in and extend it to slightly more complex formulationsof situations . . . Few if any of the conclusions of successful game-theoretic analyses are startling or mysterious or arcane; after the fact, it is usually easy to say, 'Well, I think I already knew that"'[Kreps 1990, 87-88]. Sen [1990, 144] notes that an improvement in employment opportunities might give a woman "(1) a better breakdown position, (2) possibly a clearer perception of her individuality and well-being, and (3) a higher 'perceived contribution'to the family's economic position."Only the first of these three effects would be recognizedby a Nash-type bargaining model. Agarwal [1994] also discusses the importance to women's bargaining power of access to support fromthe state, kin, women'sorganizations,etc. Agarwal [1994] explains that bargaining need not be explicit. Many decisions regarding work and consumptionmay never be discussed, much less explicitly bargained over. But one might still regard households as engaging in implicit bargaining and investigate empirically whether household allocations change in response to "external" changes "asif' they were being renegotiated in accordancewith a bargaining model. See Seiz [1991] for references to feminist work using nonformalizedbargaining approaches to analyze a variety of phenomena. And see Agarwal [1994] for suggestions regarding extension of the bargaining frameworkto arenas outside the household.

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11. 12. 13. 14. 15.

16.

17.

18. 19.

20.

References
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CambridgeUniversity Press, 1994. Anderson, Donna M. "TheApplicationof Game Theory to Family Economics."Unpublished manuscript,Michigan State University, 1992. Becker, Gary S. "ATheory of MarriagePart II."Journal of Political Economy82 (1974): SilS26.

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(February 1981b): 1-15. Folbre, Nancy. "Hearts and Spades: Paradigms of Household Economics."WorldDevelopment 14, no. 2 (1986): 245-55. In Harsanyi, John C. "Bargaining." The New Palgrave:A Dictionaryof Economics,edited by John Eatwell, Murray Milgate, and Peter Newman. 1987. Reprinted in The New Paigrave: Game Theory.New York:W. W. Norton and Co., 1989. Horney, Mary Jean, and MarjorieB. McElroy."TheHousehold Allocation Problem:Empirical Results from a Bargaining Model."Researchin Population Economics 6 (1988): 1538. Kreps, David M. Game Theoryand EconomicModeling. New York:OxfordUniversity Press,
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Ott, Notburga. Intrafamily Bargaining and Household Decisions. New York:Springer-Verlag, 1992. Seiz, Janet A. "The Bargaining Approach and Feminist Methodology." Review of Radical Political Economics 23, nos. 1 and 2 (1991): 22-29. . "Genderand Economic Research." In Post-PopperianMethodologyof Economics: RecoveringPractice, edited by Neil de Marchi. Boston:Kluwer, 1992. Sen, Amartya K. "Genderand CooperativeConflicts."In Persistent Inequalities: Womenand WorldDevelopment,edited by Irene Tinker. New York:OxfordUniversity Press, 1990. Tauchen, Helen V., Ann Dryden Witte, and Sharon K. Long. "DomesticViolence:A Nonrandom Affair." InternationalEconomicReview 32, no. 2 (1991): 491-511.