Risk aversion in bargaining: An experimental study

J. Keith Murnighan*, Alvin E. Roth, Francoise Schoumaker

*Corresponding author for this work

Research output: Contribution to journalArticle

62 Scopus citations

Abstract

This paper reports the results of three experiments designed to test the predictions of the principal game-theoretic models of bargaining concerning the influence of risk aversion on bargaining outcomes. These models predict that risk aversion will be disadvantageous in bargaining except in situations in which potential agreements are lotteries with a positive probability of being worse than disagreement. The experimental results support the models' predictions. However, in the range of payoffs studied here, the effects due to risk aversion may be smaller than some of the focal point effects observed in previous experiments. Implications for further theoretical and experimental work are considered.

Original languageEnglish (US)
Pages (from-to)101-124
Number of pages24
JournalJournal of Risk and Uncertainty
Volume1
Issue number1
DOIs
StatePublished - Mar 1 1988

Keywords

  • bargaining
  • experiments
  • risk aversion

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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