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Between anchors and aspirations: a new family of bargaining solutions

Author

Listed:
  • Emin Karagözoğlu

    (Bilkent University
    CESifo Munich)

  • Kerim Keskin

    (Kadir Has University)

  • Elif Özcan-Tok

    (Central Bank of the Republic of Turkey)

Abstract

We study the salience and power of reference points in determining the effective anchors and aspirations in bargaining problems. Along this line, we enrich the analysis of the standard bargaining model with two new parameters: the first parameter can be interpreted as the effectiveness (or salience) of the reference point in determining the anchor, whereas the second parameter can be interpreted as its effectiveness in shaping agents’ aspirations. Utilizing these parameters, we provide a unifying framework for the study of bargaining problems with a reference point. The two-parameter family of bargaining solutions we obtain encompasses some well-known solutions as special cases. We offer multiple characterizations for each individual member of this family as well as two characterizations for the whole solution family in bilateral bargaining problems.

Suggested Citation

  • Emin Karagözoğlu & Kerim Keskin & Elif Özcan-Tok, 2019. "Between anchors and aspirations: a new family of bargaining solutions," Review of Economic Design, Springer;Society for Economic Design, vol. 23(1), pages 53-73, June.
    • Handle: RePEc:spr:reecde:v:23:y:2019:i:1:d:10.1007_s10058-019-00220-4
    DOI: 10.1007/s10058-019-00220-4
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    Cited by:

    1. Carlos Alós-Ferrer & Jaume García-Segarra & Miguel Ginés-Vilar, 2018. "Anchoring on Utopia: a generalization of the Kalai–Smorodinsky solution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 6(2), pages 141-155, October.
    2. Tarık Kara & Emin Karagözoğlu & Elif Özcan-Tok, 2021. "Bargaining, Reference Points, and Limited Influence," Dynamic Games and Applications, Springer, vol. 11(2), pages 326-362, June.
    3. Feltovich, Nick, 2019. "Is earned bargaining power more fully exploited?," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 152-180.
    4. William Thomson, 2022. "On the axiomatic theory of bargaining: a survey of recent results," Review of Economic Design, Springer;Society for Economic Design, vol. 26(4), pages 491-542, December.

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    More about this item

    Keywords

    Anchors; Aspirations; Axiomatic approach; Bargaining problems; Bargaining solutions; Disagreement point; Reference point;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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