On the Ranking of Bilateral Bargaining Opponents

Maria Gallego Ross Cressman ()
Additional contact information
Maria Gallego Ross Cressman: Wilfrid Laurier University, http://www.wlu.ca/homepage.php?grp_id=754&ct_id=62

Working Papers from Wilfrid Laurier University, Department of Economics

Abstract: We fix the status quo (Q) and one of the bilateral bargaining agents to examine how shifting the opponent.s ideal point (type) away from Q in a unidimensional space affects the Nash and Kalai-Smorodinsky bargaining solutions when opponents differ only in their ideal points. The results are similar for both solutions. As anticipated, the bargainer whose ideal point is farthest from Q prefers a opponent whose ideal is closest to her own. A similar intuitive ranking emerges for the player closest to Q when opponent\'s preferences exhibit increasing absolute risk aversion. However, if the opponent\'s preferences exhibit decreasing absolute risk aversion (DARA), the player closest to Q prefers a more extreme opponent. This unintuitive result arises for opponents with DARA preferences because the farther their ideal point is from Q, the easier they are to satisfy.

Keywords: Game Theory; Nash bargaining problems; bargaining solutions, rankings (search for similar items in EconPapers)
JEL-codes: C7 C71 C78 (search for similar items in EconPapers)
Date: 2005, Revised 2005
View list of references

Downloads: (external link)
http://www.wlu.ca/documents/7723/Cressman%2526Gallego_May_05.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wlu:wpaper:eg0043

Access Statistics for this paper

More papers in Working Papers from Wilfrid Laurier University, Department of Economics
Contact information at EDIRC.
Series data maintained by Shelagh Pepper ().