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A Remark on Bargaining and Non-Expected Utility

  • Oscar Volij

    (Department of Economics, Iowa State University.)

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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Paper provided by Oscar Volij in its series Economic theory and game theory with number 016.

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Date of creation: 23 Jan 2002
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Publication status: Published in Mathematical Social Sciences, 44(1), 1-15, September 2002.
Handle: RePEc:nid:ovolij:016
Contact details of provider: Postal: Oscar Volij, Department of Economics, Ben-Gurion University, Beer-Sheva 84105, Israel
Web page: http://volij.co.il/

Order Information: Web: http://volij.co.il/addr.html

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  1. Grant, Simon & Kajii, Atsushi, 1995. "A Cardinal Characterization of the Rubinstein-Safra-Thomson Axiomatic Bargaining Theory," Econometrica, Econometric Society, vol. 63(5), pages 1241-49, September.
  2. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, June.
  3. Green, Jerry, 1987. ""Making book against oneself," the Independence Axiom, and Nonlinear Utility Theory," Scholarly Articles 3203640, Harvard University Department of Economics.
  4. Segal, Uzi, 1990. "Two-Stage Lotteries without the Reduction Axiom," Econometrica, Econometric Society, vol. 58(2), pages 349-77, 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. Volij, Oscar, 1996. "Epistemic Conditions for Equilibrium in Beliefs without Independence," Journal of Economic Theory, Elsevier, vol. 70(2), pages 391-406, August.
  7. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  8. Burgos, Albert & Grant, Simon & Kajii, Atsushi, 2002. "Bargaining and Boldness," Games and Economic Behavior, Elsevier, vol. 38(1), pages 28-51, January.
  9. Aumann, Robert & Brandenburger, Adam, 1995. "Epistemic Conditions for Nash Equilibrium," Econometrica, Econometric Society, vol. 63(5), pages 1161-80, September.
  10. Zilcha & I. & Safra, Z., 1990. "Bargaining Solutions Without The Expected Utility Hypothesis," Papers 33-90, Tel Aviv.
  11. Hanany, Eran & Safra, Zvi, 2000. "Existence and Uniqueness of Ordinal Nash Outcomes," Journal of Economic Theory, Elsevier, vol. 90(2), pages 254-276, February.
  12. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  13. Crawford, Vincent P., 1990. "Equilibrium without independence," Journal of Economic Theory, Elsevier, vol. 50(1), pages 127-154, February.
  14. 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 1171-86, September.
  15. 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.
  16. 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 677-94, October.
  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. Rakesh Sarin & Peter Wakker, 1994. "Folding Back in Decision Tree Analysis," Management Science, INFORMS, vol. 40(5), pages 625-628, May.
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