On risk aversion and bargaining outcomes

Volij, O. and Winter, E. (2002) On risk aversion and bargaining outcomes. Games and Economic Behavior, 41 (1). pp. 120-140. ISSN 0899-8256

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We revisit the well-known result that asserts that an increase in the degree of one's risk aversion improves the position of one's opponents. To this end, we apply Yaari's dual theory of choice under risk both to Nash's bargaining problem and to Rubinstein's game of alternating offers. Under this theory, unlike under expected utility, risk aversion influences the bargaining outcome only when this outcome is random, namely, when the players are risk lovers. In this case, an increase in one's degree of risk aversion increases one's share of the pie. © 2002 Elsevier Science (USA). All rights reserved.

Item Type:
Journal Article
Journal or Publication Title:
Games and Economic Behavior
Uncontrolled Keywords:
?? bargainingnon-expected utilityrisk aversionfinanceeconomics and econometrics ??
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Deposited On:
14 Aug 2018 13:30
Last Modified:
15 Jul 2024 18:11