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Comparing bargaining solutions in the shadow of conflict: how norms against threats can have real effects

Anbarci, Nejat, Skaperdas, Stergios and Syropoulos, Constantinos 2002, Comparing bargaining solutions in the shadow of conflict: how norms against threats can have real effects, Journal of economic theory, vol. 106, no. 1, pp. 1-16, doi: 10.1006/jeth.2001.2828.

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Title Comparing bargaining solutions in the shadow of conflict: how norms against threats can have real effects
Author(s) Anbarci, Nejat
Skaperdas, Stergios
Syropoulos, Constantinos
Journal name Journal of economic theory
Volume number 106
Issue number 1
Start page 1
End page 16
Total pages 16
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2002
ISSN 0022-0531
Keyword(s) contests
bargaining
division rules;
variable utility possibilities set;
variable threat payoffs
Summary In many economic environments agents make costly and irreversible investments (in ``guns'') that may enhance their respective threat payoffs but also shrink the utility possibilities set. In such settings, with variable threats and a variable utility possibilities set, it becomes possible to rank different bargaining solutions in terms of efficiency. We compare bargaining solutions within a class in which the influence of the threat point on the bargaining outcome varies across solutions. Under symmetry, we find that the solution in which the threat point is least influential the equal sacrifice solution Pareto-dominates the other solutions. Since the equal sacrifice solution puts the least weight on the threat point, norms against threats (that can be seen in many seemingly rhetorical pronouncements in adversarial relations) can mitigate some of the costs of conflict and therefore have efficiency- enhancing effects.
Language eng
DOI 10.1006/jeth.2001.2828
Field of Research 140104 Microeconomic Theory
Socio Economic Objective 910209 Preference, Behaviour and Welfare
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2002, Elsevier Science
Persistent URL http://hdl.handle.net/10536/DRO/DU:30078340

Document type: Journal Article
Collection: Department of Economics
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