Competition, Income Distribution, and the Middle Class: An Experimental Study

Figure 1

Sharing a surplus. The figure shows the gross payoffs of players (horizontal axis) and and (vertical axis) for sharing a surplus of with a right-skewed distribution of prizes . represents the bargaining set as well as the Pareto frontier. marks the default option (no agreement). Three focal points (egalitarian), (equal sharing), and (proportional sharing) are depicted together with their corresponding values of the distribution parameter .