Endogenous Reference Points in Bargaining
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Date
2018
Authors
Karagözoğlu, Emin
Keskin, Kerim
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Volume Title
Publisher
Springer Heidelberg
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Abstract
We allow the reference point in (cooperative) bargaining problems with a reference point to be endogenously determined. Two loss averse agents simultaneously and strategically choose their reference points taking into consideration that with a certain probability they will not be able to reach an agreement and will receive their disagreement point outcomes whereas with the remaining probability an arbitrator will distribute the resource by using (an extended) Gupta-Livne bargaining solution (Gupta and Livne in Manag Sci 34:1303-1314 1988). The model delivers intuitive equilibrium comparative statics on the breakdown probability the loss aversion coefficients and the disagreement point outcomes.
Description
Keywords
Bargaining problem, Gupta-Livne solution, Loss aversion, Prospect theory, Reference points
Turkish CoHE Thesis Center URL
Fields of Science
Citation
7
WoS Q
Q3
Scopus Q
Q2
Source
Volume
88
Issue
2
Start Page
283
End Page
295