Browsing by Subject "Bargaining problem"

Now showing 1 - 5 of 5

Open Access
Duality, area-considerations, and the Kalai–Smorodinsky solution
(Elsevier, 2017) Karagözoğlu, E.; Rachmilevitch, S.
We introduce a new solution concept for 2-person bargaining problems, which can be considered as the dual of the Equal-Area solution (EA) (see Anbarcı and Bigelow (1994)). Hence, we call it the Dual Equal-Area solution (DEA). We show that the point selected by the Kalai–Smorodinsky solution (see Kalai and Smorodinsky (1975)) lies in between those that are selected by EA and DEA. We formulate an axiom–area-based fairness–and offer three characterizations of the Kalai–Smorodinsky solution in which this axiom plays a central role. © 2016 Elsevier B.V.
Open Access
Endogenous reference points in bargaining
(Springer Verlag, 2018) Karagözoğlu, Emin; Keskin, K.
We allow the reference point in (cooperative) bargaining problems with a reference point to be endogenously determined. Two loss averse agents simultaneously and strategically choose their reference points, taking into consideration that with a certain probability they will not be able to reach an agreement and will receive their disagreement point outcomes, whereas with the remaining probability an arbitrator will distribute the resource by using (an extended) Gupta-Livne bargaining solution (Gupta and Livne in Manag Sci 34:1303-1314, 1988). The model delivers intuitive equilibrium comparative statics on the breakdown probability, the loss aversion coefficients, and the disagreement point outcomes.
Open Access
Introduction
(Springer, 2003) Koray, Semih; Sertel, M. R.; Sertel, M. R.; Koray, Semih
A main feature that distinguishes the human species from others on earth can perhaps be best summarized as its ability to design. Other attributes distinguishing humans from other living beings can be regarded as derivatives of being a “designer”. The most tangible form of the designs achieved by mankind so far is that of tools, tools created in order to achieve some objective which precedes the existence of the tool. This notion of design applies to the most primitive as well as the most advanced tools, such as we see in modern production processes based on the so-called information technologies. Although design pertaining to tool-making in this sense is as old as mankind itself, its conscious application in the social and economic sphere is very modern, and a systematic treatment of social and economic design on a scientific basis is even more recent. Social and economic institutions have in many important cases evolved by spontaneous processes based on trial and error. Until the last century conscious social design was confined to certain modifications of already existing institutions. The creation of new institutions so as to achieve a socially targeted objective is very novel and yet awaits future societies to be put into practice with full strength.
Open Access
Iterated egalitarian compromise solution to bargaining problems and midpoint domination
(Elsevier B.V., 2018) Karagözoğlu, Emin; Tok, Elif Özcan
We introduce a new solution for two-person bargaining problems: the iterated egalitarian compromise solution. It is defined by using two prominent bargaining solutions, the egalitarian solution (Kalai, 1977) and the equal-loss solution (Chun, 1988), in an iterative fashion. While neither of these two solutions satisfy midpoint domination - an appealing normative property - we show that the iterated egalitarian compromise solution does so.
Open Access
A tale of two bargaining solutions
(M D P I AG, 2015-06-19) Karagözoğlu, E.; Keskin, K.
We set up a rich bilateral bargaining model with four salient points (disagreement point, ideal point, reference point, and tempered aspirations point), where the disagreement point and the utility possibilities frontier are endogenously determined. This model allows us to compare two bargaining solutions that use reference points, the Gupta-Livne solution and the tempered aspirations solution, in terms of Pareto efficiency in a strategic framework. Our main result shows that the weights solutions place on the disagreement point do not directly imply a unique efficiency ranking in this bargaining problem with a reference point. In particular, the introduction of a reference point brings one more degree of freedom to the model which requires also the difference in the weights placed on the reference point to be considered in reaching an efficiency ranking.