Self-Serving Biases in Bargaining

There is strong evidence that in bargaining situations with asymmetric outside options people exhibit self-serving biases concerning their fairness judgements. Moreover, psychological literature suggests that this can be a driving force of bargaining impasse. This paper extends the notion of inequity aversion to incorporate self-serving biases due to asymmetric outside options and analyses whether this leads to bargaining breakdown. I distinguish between sophisticated and naive agents, that is, those agents who understand their bias and those who do not. I find that breakdown in ultimatum bargaining results from naiveté of the proposers

Nash Bargaining in Ordinal Environments

We analyze the implications of Nash’s (1950) axioms in ordinal bargaining environments; there, the scale invariance axiom needs to be strenghtened to take into account all order-preserving transformations of the agents’ utilities. This axiom, called ordinal invariance, is a very demanding one. For two-agents, it is violated by every strongly individually rational bargaining rule. In general, no ordinally invariant bargaining rule satisfies the other three axioms of Nash. Parallel to Roth (1977), we introduce a weaker independence of irrelevant alternatives axiom that we argue is better suited for ordinally invariant bargaining rules. We show that the three-agent Shapley-Shubik bargaining rule uniquely satisfies ordinal invariance, Pareto optimality, symmetry, and this weaker independence of irrelevant alternatives axiom. We also analyze the implications of other independence axioms

Nash bargaining in ordinal environments

We analyze the implications of Nash’s (1950) axioms in ordinal bargaining environments; there, the scale invariance axiom needs to be strenghtened to take into account all order-preserving transformations of the agents’ utilities. This axiom, called ordinal invariance, is a very demanding one. For two-agents, it is violated by every strongly individually rational bargaining rule. In general, no ordinally invariant bargaining rule satisfies the other three axioms of Nash. Parallel to Roth (1977), we introduce a weaker independence of irrelevant alternatives axiom that we argue is better suited for ordinally invariant bargaining rules. We show that the three-agent Shapley-Shubik bargaining rule uniquely satisfies ordinal invariance, Pareto optimality, symmetry, and this weaker independence of irrelevant alternatives axiom. We also analyze the implications of other independence axioms

Self-Serving Biases in Bargaining

There is strong evidence that in bargaining situations with asymmetric outside options people exhibit self-serving biases concerning their fairness judgements. Moreover, psychological literature suggests that this can be a driving force of bargaining impasse. This paper extends the notion of inequity aversion to incorporate self-serving biases due to asymmetric outside options and analyses whether this leads to bargaining breakdown. I distinguish between sophisticated and naive agents, that is, those agents who understand their bias and those who do not. I find that breakdown in ultimatum bargaining results from naiveté of the proposers.fairness perceptions; self-serving bias; inequity aversion; ultimatum bargaining; outside options

Toward an Autonomous-Agents Inspired Economic Analysis

This paper demonstrates the potential role of autonomous agents in economic theory. We first dispatch autonomous agents, built by genetic programming, to double auction markets. We then study the bargaining strategies discovered by them, and from there an autonomous-agent-inspired economic theory with regard to the optimal procrastination is derived.Agent-Based Double Auction Markets, Autonomous Agents, Genetic Programming, Bargaining Strategies, Monopsony, Procrastination Strategy

Weighted Proportional Losses Solution

We propose and characterize a new solution for problems with asymmetric bargaining power among the agents that we named weighted proportional losses solution. It is specially interesting when agents are bargaining under restricted probabilistic uncertainty. The weighted proportional losses assigns to each agent losses proportional to her ideal utility and also proportional to her bargaining power. This solution is always individually rational, even for 3 or more agents and it can be seen as the normalized weighted equal losses solution. When bargaining power among the agents is equal, the weighted proportional losses solution becomes the Kalai-Smorodinsky solution. We characterize our solution in the basis of restricted monotonicity and restricted concavity. A consequence of this result is an alternative characterization of Kalai-Smorodinsky solution which includes contexts with some kind of uncertainty. Finally we show that weighted proportional losses solution satisfyies desirable properties as are strong Pareto optimality for 2 agents and continuity also fulfilled by Kalai-Smorodinsky solution, that are not satisfied either by weighted or asymmetric Kalai-Smorodinsky solutions.

Collective Bargaining and Walrasian Equilibrium

This paper contributes to the research agenda on non-cooperative foundations ofWalrasian Equilibrium. A class of barganing games in which agents bargain over prices and maximum trading con- straints is considered: It is proved that all the Stationary Sub- game Perfect Equilibria of these games implement Walrasian al- locations as the bargaining frictions vanish. The main novelty of the result is twofold: (1) it holds for any number of agents; (2) it is robust to di¤erent speci�cations of the bargaining process.strategic bargaining; Walrasian Equilibrium

Contractual Structure and Wealth Accumulation

This paper examines incentives of poor agents to escape poverty by saving. Owing to limited liability, low wealth creates borrowing constraints, preventing the poor from being able to finance productive projects. Future wealth increases resulting from current saving would relax these borrowing constraints, raising future productivity and incomes, thus providing a possible channel of upward mobility. However, the extent to which these benefits accrue to the agents themselves depends on the allocation of bargaining power with their lenders (or landlords). If agents have no bargaining power, the returns to saving of poor agents are appropriated entirely by lenders, resulting in poverty traps. In this case the long run wealth distribution becomes polarized into two classes, with no middle class and no interclass mobility. If on the other hand the agents have all the bargaining power then the returns to saving accrue to them entirely, and agents accumulate wealth indefinitely irrespective of initial conditions.

Automated Bilateral Bargaining about Multiple Attributes in a One­ to ­Many Setting

Negotiations are an important way of reaching agreements between selfish autonomous agents. In this paper we focus on one-to-many bargaining within the context of agent-mediated electronic commerce. We consider an approach where a seller agent negotiates over multiple interdependent attributes with many buyer agents in a bilateral fashion. In this setting, "fairness", which corresponds to the notion of envy-freeness in auctions, may be an important business constraint. For the case of virtually unlimited supply (such as information goods), we present a number of one-to-many bargaining strategies for the seller agent, which take into account the fairness constraint, and consider multiple attributes simultaneously. We compare the performance of the bargaining strategies using an evolutionary simulation, especially for the case of impatient buyers. Several of the developed strategies are able to extract almost all the surplus; they utilize the fact that the setting is one-to-many, even though bargaining is bilateral