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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

Suggested Citation

  • Harrington, Joseph E, Jr, 1990. "The Role of Risk Preferences in Bargaining When Acceptance of a Proposal Requires Less than Unanimous Approval," Journal of Risk and Uncertainty, Springer, vol. 3(2), pages 135-154, June.
    • Handle: RePEc:kap:jrisku:v:3:y:1990:i:2:p:135-54
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    Cited by:

    1. Maria Montero, 2007. "Inequity Aversion May Increase Inequity," Economic Journal, Royal Economic Society, vol. 117(519), pages 192-204, March.
    2. Giuseppe Attanasi & Luca CORAZZINI & Nikolaos GEORGANTZIS & Francesco PASSARELLI, 2009. "Risk Aversion, Over-Confidence and Private Information as determinants of Majority Thresholds," LERNA Working Papers 09.26.302, LERNA, University of Toulouse.
    3. Attanasi, Giuseppe & Corazzini, Luca & Passarelli, Francesco, 2017. "Voting as a lottery," Journal of Public Economics, Elsevier, vol. 146(C), pages 129-137.
    4. Norman, Peter, 2002. "Legislative Bargaining and Coalition Formation," Journal of Economic Theory, Elsevier, vol. 102(2), pages 322-353, February.
    5. Eraslan, Hülya & Merlo, Antonio, 2017. "Some unpleasant bargaining arithmetic?," Journal of Economic Theory, Elsevier, vol. 171(C), pages 293-315.
    6. Tasos Kalandrakis, 2007. "Majority Rule Dynamics with Endogenous Status Quo," Wallis Working Papers WP46, University of Rochester - Wallis Institute of Political Economy.
    7. Andrzej Baranski & Rebecca Morton, 2022. "The determinants of multilateral bargaining: a comprehensive analysis of Baron and Ferejohn majoritarian bargaining experiments," Experimental Economics, Springer;Economic Science Association, vol. 25(4), pages 1079-1108, September.
    8. Guillaume R. Fréchette & Emanuel Vespa, 2017. "The determinants of voting in multilateral bargaining games," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(1), pages 26-43, July.
    9. 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.
    10. 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;Society for the Advancement of Economic Theory (SAET), vol. 49(3), pages 779-800, April.
    11. Eraslan, Hulya & Merlo, Antonio, 2002. "Majority Rule in a Stochastic Model of Bargaining," Journal of Economic Theory, Elsevier, vol. 103(1), pages 31-48, March.
    12. Maria Montero, 2008. "Altruism, Spite and Competition in Bargaining Games," Theory and Decision, Springer, vol. 65(2), pages 125-151, September.
    13. Herings, P.J.J. & Houba, H, 2010. "The Condercet paradox revisited," Research Memorandum 009, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    14. 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.
    15. Keser, Claudia & Müller, Stephan & Peterlé, Emmanuel & Rau, Holger A., 2018. "Bargaining and the role of negotiators' competitiveness," University of Göttingen Working Papers in Economics 341, University of Goettingen, Department of Economics.
    16. Tomohiko Kawamori, 2005. "Players' Patience and Equilibrium Payoffs in the Baron-Ferejohn Model," Economics Bulletin, AccessEcon, vol. 3(43), pages 1-5.
    17. Andrzej Baranski & John H. Kagel, 2015. "Communication in legislative bargaining," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 59-71, July.
    18. Bradfield, Anthony J. & Kagel, John H., 2015. "Legislative bargaining with teams," Games and Economic Behavior, Elsevier, vol. 93(C), pages 117-127.
    19. 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.
    20. Montero, Maria & Vidal-Puga, Juan J., 2007. "Demand Commitment in Legislative Bargaining," American Political Science Review, Cambridge University Press, vol. 101(4), pages 847-850, November.
    21. Nels Christiansen & John H. Kagel, 2019. "Reference point effects in legislative bargaining: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 22(3), pages 735-752, September.
    22. Christiansen, Nels, 2015. "Greasing the wheels: Pork and public goods contributions in a legislative bargaining experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 64-79.
    23. repec:ebl:ecbull:v:3:y:2005:i:43:p:1-5 is not listed on IDEAS
    24. Evdokimov, Kirill S., 2020. "Uniqueness of equilibrium payoffs in the stochastic model of bargaining," Economics Letters, Elsevier, vol. 188(C).
    25. Nels Christiansen & Sotiris Georganas & John H. Kagel, 2014. "Coalition Formation in a Legislative Voting Game," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 182-204, February.

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