Perfect Equilibrium in Bargaining Between Two Risk Averse Players

I show that in noncooperative bargaining between two players with risk aversion, the more risk averse player always obtains a larger equilibrium payoff, after controlling for the other sources of advantage in bargaining e.g. patience and order of bargaining. I contrast my result with that of Roth (1985) that a risk averse player is disadvantaged when facing a risk-neutral opponent. A recent result from Rausser and Simon (2016) disputing the adverse connection between Nash bargaining solution and risk aversion is also related with my subgame perfect equilibrium case

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Year of publication:	2020
Authors:	Khan, Muhammad
Publisher:	[2020]: [S.l.] : SSRN
Subject:	Risikoaversion \| Risk aversion \| Spieltheorie \| Game theory \| Verhandlungen \| Negotiations \| Verhandlungstheorie \| Bargaining theory \| Risiko \| Risk

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