On Risk Aversion in the Rubinstein Bargaining Game

Emanuel Kohlscheen and O’Connell, Stephen
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O’Connell, Stephen: Department of Economics, Swarthmore College,
Authors registered in the RePEc Author Service: Stephen A. O'Connell ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We derive closed-form solutions for the Rubinstein alternating offers game for cases where the two players have (possibly asymmetric) utility functions that belong to the HARA class and discount the future at a constant rate. We show that risk aversion may increase a bargainers payoff. This result - which contradicts Roth’s 1985 theorem tying greater risk neutrality to a smaller payoff - does not rely on imperfect information or departures from expected utility maximization.

Pages: 15 pages
Date: 2008
New Economics Papers: this item is included in nep-gth and nep-upt
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Working Paper: On Risk Aversion in the Rubinstein Bargaining Game (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:878

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