A generalized version of the inequality equivalence criterion: a surplus sharing characterization, complete and partial orderings

We consider an axiomatic characterization of the perception of inequality across distributions with different total income which is consistent with those obtained in a game theoretic context in surplus sharing literature by Moulin (Int. J. Game Theory 1987), Young (Math. Op. Res. 1987, J. Econ. Theory 1988) and Pfingsten (Math. Soc. Sc. 1991). Within this set-up we discuss a generalized version of the inequality equivalence concept introduced in Zoli (1998). This criterion is able to encompass all the most used criteria of inequality equivalence and is sufficiently flexible to provide a perception consistent with recent evidence from questionnaire investigations shown in Amiel and Cowell (1997): namely, that the inequality perception goes from the realtive to the absolute as incomes increase. The class of inequality indices and dominance criteria, which are associated with the suggested generalized criterion, are completely characterized.