A remark on bargaining and non-expected utility

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Abstract

We show that a bargaining game of alternating offers with exogenous risk of breakdown and played by dynamically consistent non-expected utility maximizers is formally equivalent to Rubinstein's [Econometrica 50 (1982) 97] game with time preference. Within this game, the behavior of dynamically consistent players is indistinguishable from the behavior of expected utility maximizers.

Original languageEnglish
Pages (from-to)17-24
Number of pages8
JournalMathematical Social Sciences
Volume44
Issue number1
DOIs
StatePublished - 19 Aug 2002
Externally publishedYes

Keywords

  • Bargaining
  • Compound lotteries
  • Dynamic consistency

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