On risk aversion and bargaining outcomes

We revisit the well-known result that asserts that an increase in the degree of one's risk aversion improves the position of one's opponents. To this end, we apply Yaari's dual theory of choice under risk both to Nash's bargaining problem and to Rubinstein's game of alternating offers. Under this theory, unlike under expected utility, risk aversion influences the bargaining outcome only when this outcome is random, namely, when the players are risk lovers. In this case, an increase in one's degree of risk aversion increases one's share of the pie. © 2002 Elsevier Science (USA). All rights reserved

A characterization of the Nash bargaining solution

We characterize the Nash bargaining solution replacing the axiom of Independence of Irrelevant Alternatives with three independent axioms: Independence of Non-Individually Rational Alternatives, Twisting, and Disagreement Point Convexity. We give a non-cooperative bargaining interpretation to this last axiom