Bargaining over an uncertain outcome: the role of beliefs

Antoine Billot (1) , Alain Chateauneuf (2) , Itzhak Gilboa (3) , Jean-Marc Tallon (4)

1 LEM - Laboratoire d'Économie Moderne
2 CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique
3 TAU - Tel Aviv University
4 EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative

We study the Nash bargaining solution of a problem in which two agents bargain over an uncertain outcome. Under the assumptions of risk neutrality and of constant absolute risk aversion, we study the way that the solution varies, ex ante, when we vary the beliefs of one agent. Changing an agent's beliefs in a way that makes them "more distant" from the other agent's beliefs makes the second agent better off.

Keywords: risk; games; outcome

Domains: Humanities and Social Sciences; Economics and Finance; Economy and decision science

Antoine Billot, Alain Chateauneuf, Itzhak Gilboa, Jean-Marc Tallon. Bargaining over an uncertain outcome: the role of beliefs. Decisions in Economics and Finance, 2002, Vol.25, n°1, pp.33-45. ⟨10.1007/s102030200002⟩. ⟨hal-00481313⟩