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On risk aversion in the Rubinstein bargaining game
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Kohlscheen, Emanuel and O’Connell, Stephen A. (2008) On risk aversion in the Rubinstein bargaining game. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.878).
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
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.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HB Economic Theory Q Science > QA Mathematics |
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Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Game theory, Risk, Utility theory -- Mathematical models, Negotiation | ||||
Series Name: | Warwick economic research papers | ||||
Publisher: | University of Warwick, Department of Economics | ||||
Place of Publication: | Coventry | ||||
Official Date: | October 2008 | ||||
Dates: |
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Number: | No.878 | ||||
Number of Pages: | 15 | ||||
Status: | Not Peer Reviewed | ||||
Access rights to Published version: | Open Access (Creative Commons) |
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