Title: Risk Aversion in the Nash Bargaining Problem with Risky Outcomes and Risky Disagreement Points
Abstract: According to this paper, the analysis of the Nash bargaining problem with risky outcomes must include the cases where the disagreement outcome itself is risky as well. Thus, one generalizes the Roth and Rothblum results to models with risky disagreement outcome as well. It turns out that their result will depend, in some cases, upon the «degree of change» in risk aversion. Particularly, when the potential agreement, has an outcome which makes player 2 worse off compared to the disagreement, and if the disagreement does not dominate that outcome (i.e., its support contains a worse outcome), then when player 2 becomes «sufficiently» more risk averse player 1 becomes better off. Thus one obotains that increase in risk aversion may be disadvantageous to player 2 even if the risky disagreement is preferred to some outcome of the (risky) agreement
Publication Year: 1990
Publication Date: 1990-07-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 22
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot