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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. Norman, Peter, 2002. "Legislative Bargaining and Coalition Formation," Journal of Economic Theory, Elsevier, vol. 102(2), pages 322-353, February.
  2. repec:ebl:ecbull:v:3:y:2005:i:43:p:1-5 is not listed on IDEAS
  3. Attanasi, Giuseppe & Corazzini, Luca & Passarelli, Francesco, 2010. "Voting as a Lottery," TSE Working Papers 09-116, Toulouse School of Economics (TSE), revised Nov 2010.
  4. Tomohiko Kawamori, 2005. "Players' Patience and Equilibrium Payoffs in the Baron-Ferejohn Model," Economics Bulletin, AccessEcon, vol. 3(43), pages 1-5.
  5. 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.
  6. Antonio Merlo & Hulya Eraslan, 2009. "Some Unpleasant Bargaining Arithmetics?," 2009 Meeting Papers 279, Society for Economic Dynamics.
  7. Maria Montero, 2008. "Altruism, Spite and Competition in Bargaining Games," Theory and Decision, Springer, vol. 65(2), pages 125-151, September.
  8. Cho, Seok-ju & Duggan, John, 2009. "Bargaining foundations of the median voter theorem," Journal of Economic Theory, Elsevier, vol. 144(2), pages 851-868, March.
  9. Guillaume R. Frechette & John H. Kagel & Massimo Morelli, 2010. "Pork Versus Public Goods: An Experimental Study of Public Good Provision Within a Legislative Bargaining Framework," Economics Working Papers ECO2010/37, European University Institute.
  10. Maria Montero, 2007. "Inequity Aversion May Increase Inequity," Economic Journal, Royal Economic Society, vol. 117(519), pages C192-C204, 03.
  11. Maria Montero & Juan Vidal-Puga, 2005. "Demand commitment in legislative bargaining," Game Theory and Information 0511005, EconWPA.
  12. 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.
  13. Tasos Kalandrakis, 2007. "Majority Rule Dynamics with Endogenous Status Quo," Wallis Working Papers WP46, University of Rochester - Wallis Institute of Political Economy.
  14. 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.

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