Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167939
Authors: 
Karagözoğlu, Emin
Keskin, Kerim
Year of Publication: 
2015
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 6 [Year:] 2015 [Issue:] 2 [Pages:] 161-174
Abstract: 
We set up a rich bilateral bargaining model with four salient points (disagreement point, ideal point, reference point, and tempered aspirations point), where the disagreement point and the utility possibilities frontier are endogenously determined. This model allows us to compare two bargaining solutions that use reference points, the Gupta-Livne solution and the tempered aspirations solution, in terms of Pareto efficiency in a strategic framework. Our main result shows that the weights solutions place on the disagreement point do not directly imply a unique efficiency ranking in this bargaining problem with a reference point. In particular, the introduction of a reference point brings one more degree of freedom to the model which requires also the difference in the weights placed on the reference point to be considered in reaching an efficiency ranking.
Subjects: 
aspiration points
bargaining problem
endogenous disagreement points
reference points
JEL: 
C72
C78
D63
D74
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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