What price compromise?

This paper identifies, and tests experimentally, a prediction of the Nash bargaining axioms that may appear counterintuitive. The context is a simple bargaining problem in which two players have to agree a choice from three alternatives. One alternative favours one player and a second favours the other. The third is an apparently reasonable compromise, but is in fact precluded as an agreed choice by the Nash axioms. Experimental results show that agreement on this third alternative occurs rather often. Our subjects’ behaviour could be interpreted as the paying of an irrationally high price, according to the Nash axioms, in order to reach a compromise agreement.     

Two-person sequential bargaining behavior with exogenous breakdown

We examine bargaining behavior in a noncooperative game in which players alternate in making and responding to proposals over the division of a given surplus. Although the number of bargaining periods is unlimited and time is not discounted, the bargaining is subject to exogenous breakdown at each period with a fixed probability which is common knowledge. We manipulate three probabilities of break-down in a between-subjects design that allows comparison with previous studies of two-person bargaining with time discounting. Assuming that subjects maximize expected utility, and this utility is measured by monetary payoffs, our results reject both the subgame perfect equilibrium and equal split solutions. Data analyses reveal that a substantial percentage of subjects behave adaptively in that they systematically search for the highest acceptable demands.     

Simultaneous moves multi-person continuous time concession game

The alternating offers strategic bargaining approach (Rubinstein, 1982) suggest a unique perfect equilibrium. In this equilibrium the bargaining ends immediately and the outcome is Pareto optimal. In this paper we consider a bargaining game in which players move simultaneously. Since we allow players only to lower their demands over time we denote this game as a concession game. We demonstrate that in this game there is a perfect equilibrium in which the bargaining lasts long enough so that the pie shrinks to zero. We show that we can generalize this game to a multi-player concession game in a straightforward manner and so avoiding the difficulties of generalizing the alternating offers game to the multi-player case.     

Energy supply shocks: Macroeconomic consequences for Ukraine

In exploring the short-term macroeconomic effects of energy supply shocks in Ukraine, this paper relies on the simplifying assumption that enterprises face economic regulation but not ownership uncertainty or a soft budget constraint that would adversely affect their behavior. In a sense, it assumes that Ukraine's economy is already at the second stage of reform, when ownership, contract-enforcement, and hard budget constraint questions are less of an issue. Under these assumptions and if real wages are protected, the analysis yields clear messages. Protecting the domestic economy by not passing through external price increases may cushion the decline in production and social welfare, but at a heavy cost to savings and investment; not only does it postpone adjustment and the emergence of a competitive economy, but it also deprives the economy of investible resources. Passing through external price increases while maintaining a fixed-price regime may improve the mobilization of resources but at a heavy cost to output and welfare, because it induces a heavy contraction in activity. Liberalizing prices in the nonenergy sectors in conjunction with passing through external price increases allows these sectors to generate the larger resource transfers required by a deteriorating terms of trade, in turn pulling up output; the economy can settle at a higher level of activity and welfare than in the presence of fixed prices. The conclusion is that Ukraine must clarify ownership and contract-enforcement issues as well as harden the budget constraints of enterprises as rapidly as possible, liberalize nonenergy prices at a minimum, and begin adjusting domestic energy prices to reflect the opportunity cost of these resources. Since the fall of 1994, Ukraine has proceeded to liberalize its price and trade regime, which should bring the economy a long way to recovery as outlined in this paper.     

Explaining High‐Profile Coverage of State Supreme Court Decisions*

Objective. In this article, we investigate the decision of media in the U.S. states to give high‐profile coverage to state supreme court decisions. While research on the U.S. Supreme Court has forged an association between media coverage and the political salience of court decisions, scholars have been unable to examine such coverage in the increasingly important state courts of last resort. Methods. Utilizing new data of high‐profile coverage over time in these courts, we examine the extent to which case characteristics, judicial behavior, and institutional variation influence media attention. Our empirical model covers 28,045 state supreme court cases over all 50 states, between the years 1995–1998. Results. Our findings indicate that the likelihood of high‐profile coverage increases when certain case characteristics, particularly declarations of unconstitutionality, are present, in addition to dissent within a court. Despite the importance of institutional differences among state supreme courts, front‐page coverage is not affected by this variation. Conclusions. In our conclusions, we evaluate those scenarios in which high‐profile media coverage is more likely for state supreme court cases, and the possible implications this may have for judicial politics.     

Effects of fixed costs in two-person sequential bargaining

Rubinstein (1982) considered the problem of dividing a given surplus between two players sequentially, and then proposed a model in which the two players alternately make and respond to each other's offers through time. He further characterized the perfect equilibrium outcomes, which depend on the players time preferences and order of moves. Using both equal and unequal bargaining cost conditions and an unlimited number of rounds, two experiments were designed to compare the perfect equilibrium model to alternative models based on norms of fairness. We report analyses of final agreements, first offers, and number of bargaining rounds, which provide limited support to the perfect equilibrium model, and then conclude by recommending a shift in focus from model testing to specification of the conditions favoring one model over another.     

Alternating-Offer Bargaining and Common Knowledge of Rationality

This paper reconsiders Rubinstein's alternating-offer bargaining game with complete information. We define rationalizability and trembling- hand rationalizability (THR) for multi-stage games with observed actions. We show that rationalizability does not exclude perpetual disagreement or delay, but that THR implies a unique solution. Moreover, this unique solution is the unique subgame perfect equilibrium (SPE). Also, we reconsider an extension of Rubinstein's game where a smallest money unit is introduced: THR rules out the non-uniqueness of SPE in some particular case. Finally, we investigate the assumption of boundedly rational players. Perpetual disagreement is excluded, but not delay. Furthermore, we cannot use the asymmetric Nash bargaining solution as an approximation of the alternating-offer bargaining model once the players are boundedly rational ones.     

Altruism, Spite and Competition in Bargaining Games

This paper shows that altruism may be beneficial in bargaining when there is competition for bargaining partners. In a game with random proposers, the most altruistic player has the highest material payoff if players are sufficiently patient. However, this advantage is eroded as the discount factor increases, and if players are perfectly patient altruism and spite become irrelevant for material payoffs.     

Spatial bargaining in rectilinear facility location problem

Theory and Decision - We consider a spatial bargaining model where players collectively choose a facility location on a two-dimensional rectilinear distance space through bargaining using the...     

集体谈判的内部国家机制：以温岭羊毛衫行业工价集体谈判为例

集体谈判作为西方社会劳资冲突制度化的社会发明,不但得到工人和工会的拥护,同时也引起了雇主的兴趣。通过协商的程序、承诺的遵守以及共同利益的形成,可以构筑消解工人集体怨恨、制造工人认同的内部国家机制。在中国,工会受组合主义限制,尚不能成为集体谈判的有效发起者,愈演愈烈的劳资冲突却有可能使雇主成为实际的“发动引擎”。本文通过对温岭羊毛衫行业工价集体谈判过程的描述,探讨在竞争和斗争的背景下,雇主和工人在集体谈判过程中的互动,以及在以生存伦理为基础的工人群体中逐步形成从“无序抗争”到“有序遵守”的内部国家机制。     

Bargaining and Strategic Demand Commitment

On occasion, in multilateral negotiations, interested parties make unilateral demands. Certain agreements need unanimity. However, a lesser degree of consensus may be feasible. In this paper, an alternating demand bargaining game among n players is proposed, which envisages varying consensus requirements and commitment, both crucial in generating a unique and efficient outcome of the bargaining process.     

A computational general equilibrium approach to the shadow pricing of trade restrictions and the adjustment of the exchange rate, with an application to Argentina

A general equilibrium model of an open economy in which there are ad valorem texes on domestic production and export activities, and import activities are subject to both tariffs and quotas is constructed. A domestic monetary asset, foreign exchange, and a corresponding nominal exchange rate are introduced and a numerical example of the model is constructed. The example is solved via the Scarf fixed point algorithm, first with taut quotas and then after having relaxed quotas. Various price indices are then used to guide programs designed to stabilize the trade balance against the quota liberalization. An empirical example, using Argentine data, is carried out to find the quota equivalent of a particular tariff.     

Rising property ownership among women in Kathmandu,Nepal: an exploration of causes and consequences

Pandey S. Rising property ownership among women in Kathmandu, Nepal: an exploration of causes and consequences Int J Soc Welfare 2010: 19: 281–292 © 2009 The Author(s), Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare. There is evidence that property ownership empowers women by increasing their self‐confidence, ability to contribute to decisions, control over their reproductive behaviour, ability to borrow and economic independence. Yet, women around the world own negligible assets. It is not surprising that assets ownership among Nepalese women is insignificant. In urban areas of Nepal, however, women's assets holdings have increased dramatically over the last four decades. The article analyses the institutions that resulted in increased asset holdings among women in Kathmandu, Nepal, and shows how strategic action by some men and women has given rise to new norms which favour property ownership among women. The findings are based on a sample of 193 women who legally own property (home or land) in Kathmandu, Nepal.     

Ambiguity when playing coordination games across cultures

Cultural differences can be a source of ambiguity in coordination games. As players are likely to experience more ambiguity when playing a different culture, we expect players to choose safer strategies. We run experiments with a stag hunt and bargaining coordination game. Using a between-subjects design, we vary the identity of the opponent between someone of the same culture or a different culture. We compare the responses of British and East Asian students at the University of Exeter and show the cultural identity of the opponent by physical appearance. While we find no significant differences between treatments for East Asians, the British choose the safer option in the stag hunt and demand more of the pie in the bargaining game when faced with an opponent from a different culture.

     

A Theory of Rational Choice under Ignorance

This paper contributes to a theory of rational choice for decision-makers with incomplete preferences due to partial ignorance, whose beliefs are representable as sets of acceptable priors. We focus on the limiting case of `Complete Ignorance' which can be viewed as reduced form of the general case of partial ignorance. Rationality is conceptualized in terms of a `Principle of Preference-Basedness', according to which rational choice should be isomorphic to asserted preference. The main result characterizes axiomatically a new choice-rule called `Simultaneous Expected Utility Maximization'. It can be interpreted as agreement in a bargaining game (Kalai-Smorodinsky solution) whose players correspond to the (extremal) `acceptable priors' among which the decision maker has suspended judgment. An essential but non-standard feature of Simultaneous Expected Utility choices is their dependence on the entire choice set. This is justified by the conception of optimality as compromise rather than as superiority in pairwise comparisons.     

The valuation of contingent claims markets

This article studies an agent's valuation of the right to trade in a complete contingent claims market. The proposed measure generalizes the Pratt (1964) risk premium, which captures the willingness to pay to replace a given risky wealth prospect with an actuarially equivalent, nonrisky wealth. Specifically, we define ageneralized risk premium to be the willingness to pay to trade at going market prices. If state prices are actuarially fair, the Pratt premium is obtained as a special case. We derive several properties of this generalized premium and note its relationship to the option price of a public project under uncertainty.     

A bargaining model with players' perceptions on the retractability of offers

This paper studies a generalization of Rubinstein's bargaining model with retractable offers. The model incorporates and parameterizes the bargainers' perceptions on the retractability of offers. Our key result characterizes the limiting set of perfect equilibria as the time interval between two consecutive offers tends to zero. In this limit, for any possible players' perceptions on the retractability of offers such that at least one of the players perceives that there is at least a small chance that offers may be retractable, the bargaining game possesses a continuum of perfect equilibria.     

Loss Aversion and Bargaining

We consider bargaining situations where two players evaluate outcomes with reference-dependent utility functions, analyzing the effect of differing levels of loss aversion on bargaining outcomes. We find that as with risk aversion, increasing loss aversion for a player leads to worse outcomes for that player in bargaining situations. An extension of Nash's axioms is used to define a solution for bargaining problems with exogenous reference points. Using this solution concept we endogenize the reference points into the model and find a unique solution giving reference points and outcomes that satisfy two reasonable properties, which we predict would be observed in a steady state. The resulting solution also emerges in two other approaches, a strategic (non-cooperative) approach using Rubinstein's (1982) alternating offers model and a dynamic approach in which we find that even under weak assumptions, outcomes and reference points converge to the steady state solution from any non-equilibrium state.     

Implementing egalitarianism in a class of Nash demand games

We add a stage to Nash’s demand game by allowing the greedier player to revise his demand if the demands are not jointly feasible. If he decides to stick to his initial demand, then the game ends and no one receives anything. If he decides to revise it down to \(1-x\), where x is his initial demand, the revised demand is implemented with certainty. The implementation probability changes linearly between these two extreme cases. We derive a condition on the feasible set under which the two-stage game has a unique subgame perfect equilibrium. In this equilibrium, there is first-stage agreement on the egalitarian demands. We also study two n-player versions of the game. In either version, if the underlying bargaining problem is “divide-the-dollar,” then equal division is sustainable in a subgame perfect equilibrium if and only if the number of players is at most four.     

Financial Capability,Asset Ownership,and Later-Age Immigration: Evidence From a Sample of Low-Income Older Asian Immigrants

We examined financial capability and asset ownership among low-income older Asian immigrants with special attention given to later-age immigrants who came to the United States when they were 55 years old or older. Survey data collected from supported employment program participants (N = 150) were used. The analyses demonstrated a low level of financial knowledge and asset ownership in the sample. The findings also indicated that later-age immigrants’ financial-management skills, knowledge of social programs, and asset ownership were significantly lower than those of young-age immigrants. These findings call for active interventions to enhance economic security among low-income older Asian immigrants.