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A remark on bargaining and non-expected utility

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  • Volij, Oscar

Abstract

We show that a bargaining game of alternating offers with exogenous risk of breakdown and played by dynamically consistent non-expected utility maximizers is formally equivalent to Rubinstein's (1982) game with time preference. Within this game, the behavior of dynamically consistent players is indistinguishable from the behavior of expected utility maximizers.
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  • Volij, Oscar, 2002. "A remark on bargaining and non-expected utility," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 17-24, September.
  • Handle: RePEc:eee:matsoc:v:44:y:2002:i:1:p:17-24
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Volij, Oscar, 1996. "Epistemic Conditions for Equilibrium in Beliefs without Independence," Journal of Economic Theory, Elsevier, vol. 70(2), pages 391-406, August.
    3. Crawford, Vincent P., 1990. "Equilibrium without independence," Journal of Economic Theory, Elsevier, vol. 50(1), pages 127-154, February.
    4. Segal, Uzi, 1990. "Two-Stage Lotteries without the Reduction Axiom," Econometrica, Econometric Society, vol. 58(2), pages 349-377, March.
    5. Volij, Oscar & Winter, Eyal, 2002. "On risk aversion and bargaining outcomes," Games and Economic Behavior, Elsevier, vol. 41(1), pages 120-140, October.
    6. Green, Jerry, 1987. ""Making book against oneself," the Independence Axiom, and Nonlinear Utility Theory," Scholarly Articles 3203640, Harvard University Department of Economics.
    7. Rubinstein, Ariel & Safra, Zvi & Thomson, William, 1992. "On the Interpretation of the Nash Bargaining Solution and Its Extension to Non-expected Utility Preferences," Econometrica, Econometric Society, vol. 60(5), pages 1171-1186, September.
    8. Robert Aumann & Adam Brandenburger, 2014. "Epistemic Conditions for Nash Equilibrium," World Scientific Book Chapters,in: The Language of Game Theory Putting Epistemics into the Mathematics of Games, chapter 5, pages 113-136 World Scientific Publishing Co. Pte. Ltd..
    9. Fishburn, Peter C & Rubinstein, Ariel, 1982. "Time Preference," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(3), pages 677-694, October.
    10. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    11. Safra Zvi & Zilcha Itzhak, 1993. "Bargaining Solutions without the Expected Utility Hypothesis," Games and Economic Behavior, Elsevier, vol. 5(2), pages 288-306, April.
    12. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
    13. Rakesh Sarin & Peter Wakker, 1994. "Folding Back in Decision Tree Analysis," Management Science, INFORMS, vol. 40(5), pages 625-628, May.
    14. Irving H. LaValle & Kenneth R. Wapman, 1986. "Note---Rolling Back Decision Trees Requires the Independence Axiom!," Management Science, INFORMS, vol. 32(3), pages 382-385, March.
    15. Jerry Green, 1987. ""Making Book Against Oneself," the Independence Axiom, and Nonlinear Utility Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 102(4), pages 785-796.
    16. Grant, Simon & Kajii, Atsushi, 1995. "A Cardinal Characterization of the Rubinstein-Safra-Thomson Axiomatic Bargaining Theory," Econometrica, Econometric Society, vol. 63(5), pages 1241-1249, September.
    17. Dekel, Eddie & Safra, Zvi & Segal, Uzi, 1991. "Existence and dynamic consistency of Nash equilibrium with non-expected utility preferences," Journal of Economic Theory, Elsevier, vol. 55(2), pages 229-246, December.
    18. Hanany, Eran & Safra, Zvi, 2000. "Existence and Uniqueness of Ordinal Nash Outcomes," Journal of Economic Theory, Elsevier, vol. 90(2), pages 254-276, February.
    19. Burgos, Albert & Grant, Simon & Kajii, Atsushi, 2002. "Bargaining and Boldness," Games and Economic Behavior, Elsevier, vol. 38(1), pages 28-51, January.
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    Cited by:

    1. Efe A Ok & Yusufcan Masatlioglu, 2003. "A General Theory of Time Preferences," Levine's Bibliography 234936000000000089, UCLA Department of Economics.
    2. Burgos, Albert & Grant, Simon & Kajii, Atsushi, 2002. "Corrigendum to "Bargaining and boldness": [Games Econ. Behav. 38 (2002) 28-51]," Games and Economic Behavior, Elsevier, vol. 41(1), pages 165-168, October.

    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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