Relative responsiveness of bargaining solutions to changes in status-quo payoffs

Anbarci, Nejat 2008, Relative responsiveness of bargaining solutions to changes in status-quo payoffs, Atlantic Economic Journal, vol. 36, no. 3, pp. 293-299.

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Title Relative responsiveness of bargaining solutions to changes in status-quo payoffs
Author(s) Anbarci, Nejat
Journal name Atlantic Economic Journal
Volume number 36
Issue number 3
Start page 293
End page 299
Total pages 7
Publisher Springer Netherlands
Place of publication Amsterdam, Netherlands
Publication date 2008-09
ISSN 0197-4254
1573-9678
Keyword(s) status-quo payoffs
the Nash solution
the Kalai/Smorodinsky solution
the egalitarian solution
the equal sacrifice solution
the equal gains solution
Summary It is a well-known fact that several prominent bargaining solutions are responsive to changes in status-quo (i.e., disagreement or fallback) payoffs. When an agent’s status-quo payoff increases, his solution payoff either stays the same or increases. A fully general result for these solutions’ status-quo point ranking is impossible to establish. In this paper, using an important class of bargaining problems, a ranking of the relative status-quo point responsiveness of prominent bargaining solutions is obtained. Using the Constant Elasticity of Substitution class of bargaining problems, regardless of the concavity of the Pareto frontier and the level of increase in one’s status-quo payoff, we find the equal gains solution is the most responsive with respect to changes in status-quo payoffs, followed by the Nash solution. The equal sacrifice solutions is the least responsive, followed by the Kalai/Smorodinsky solution.
Language eng
Field of Research 140299 Applied Economics not elsewhere classified
Socio Economic Objective 970114 Expanding Knowledge in Economics
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2008, International Atlantic Economic Society
Persistent URL http://hdl.handle.net/10536/DRO/DU:30021801

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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