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The Role of Risk Preferences in Bargaining When Acceptance of a Proposal Requires Less than Unanimous Approval

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  • Harrington, Joseph E, Jr

Abstract

The role of risk preferences in determining the outcome to bargaining is examined for the case in which acceptance of a proposal requires less than unanimous approval. Using an n-agent extension of the Stahl-Rubinstein alternative offer model, we find that risk preferences play a fundamentally different role when bargaining is settled using a nonunanimity voting rule. Risk preferences determine not only an agent's reservation price but also the likelihood that he is made part of the winning coalition. An implication of this analysis is that when the preferences of the agents are not too diverse, it is advantageous for an agent to be relatively risk-averse. Copyright 1990 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 3 (1990)
Issue (Month): 2 (June)
Pages: 135-54

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Handle: RePEc:kap:jrisku:v:3:y:1990:i:2:p:135-54

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Web page: http://www.springerlink.com/link.asp?id=100299

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Cited by:
  1. Maria Montero, 2006. "Inequity Aversion May Increase Inequity," Working Papers 2006.80, Fondazione Eni Enrico Mattei.
  2. Giuseppe Attanasi, Luca Corazzini, Nikolaos Georgantzis, Francesco Passarelli., 2009. "Risk Aversion, Over-Confidence and Private Information as Determinants of Majority Thresholds," ISLA Working Papers 34, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy.
  3. Norman,P., 2000. "Legislative bargaining and coalition formation," Working papers 12, Wisconsin Madison - Social Systems.
  4. Giuseppe Attanasi, Luca Corazzini, Francesco Passarelli, 2007. "Voting as a Lottery," ISLA Working Papers 28, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy.
  5. repec:ebl:ecbull:v:3:y:2005:i:43:p:1-5 is not listed on IDEAS
  6. Tomohiko Kawamori, 2005. "Players' Patience and Equilibrium Payoffs in the Baron-Ferejohn Model," Economics Bulletin, AccessEcon, vol. 3(43), pages 1-5.
  7. Hülya Eraslan & Antonio Merlo, 2014. "Some Unpleasant Bargaining Arithmetic?," PIER Working Paper Archive 14-003, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  8. John Duggan & Seok-ju Cho, 2007. "Bargaining Foundations of the Median Voter Theorem," Wallis Working Papers WP49, University of Rochester - Wallis Institute of Political Economy.
  9. Guillaume Fréchette & John Kagel & Massimo Morelli, 2012. "Pork versus public goods: an experimental study of public good provision within a legislative bargaining framework," Economic Theory, Springer, vol. 49(3), pages 779-800, April.
  10. James M. Snyder Jr. & Michael M. Ting & Stephen Ansolabehere, 2005. "Legislative Bargaining under Weighted Voting," American Economic Review, American Economic Association, vol. 95(4), pages 981-1004, September.
  11. Maria Montero & Juan Vidal-Puga, 2005. "Demand commitment in legislative bargaining," Game Theory and Information 0511005, EconWPA.
  12. Maria Montero, 2008. "Altruism, Spite and Competition in Bargaining Games," Theory and Decision, Springer, vol. 65(2), pages 125-151, September.
  13. Tsai, Tsung-Sheng, 2009. "The evaluation of majority rules in a legislative bargaining model," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 674-684, December.
  14. Tasos Kalandrakis, 2007. "Majority Rule Dynamics with Endogenous Status Quo," Wallis Working Papers WP46, University of Rochester - Wallis Institute of Political Economy.

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