Between anchors and aspirations: a new family of bargaining solutions

Emin Karagözoğlu, Kerim Keskin and Elif Özcan-Tok
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Elif Özcan-Tok: Central Bank of the Republic of Turkey

Review of Economic Design, 2019, vol. 23, issue 1, No 5, 53-73

Abstract: Abstract We study the salience and power of reference points in determining the effective anchors and aspirations in bargaining problems. Along this line, we enrich the analysis of the standard bargaining model with two new parameters: the first parameter can be interpreted as the effectiveness (or salience) of the reference point in determining the anchor, whereas the second parameter can be interpreted as its effectiveness in shaping agents’ aspirations. Utilizing these parameters, we provide a unifying framework for the study of bargaining problems with a reference point. The two-parameter family of bargaining solutions we obtain encompasses some well-known solutions as special cases. We offer multiple characterizations for each individual member of this family as well as two characterizations for the whole solution family in bilateral bargaining problems.

Keywords: Anchors; Aspirations; Axiomatic approach; Bargaining problems; Bargaining solutions; Disagreement point; Reference point (search for similar items in EconPapers)
JEL-codes: C72 C78 D63 D74 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10058-019-00220-4

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