Browsing by Subject "Reference points"

Now showing 1 - 7 of 7

Open Access
Bargaining under time pressure from deadlines
(Springer, 2019) Karagözoğlu, Emin; Kocher, M. G.
We experimentally investigate the effect of time pressure from deadlines in a rich-context bargaining game with an induced reference point at the 2/3-1/3 distribution. Our results show that first proposals, concessions, and settlements are very similar for different time-pressure levels. Nevertheless, time pressure systematically influences the type of agreements reached: the likelihood of bargainers reaching agreements on the equal split is lower under time pressure. Furthermore, disagreements and last-moment-agreements (conditional on reaching an agreement) are more frequently observed under time pressure, though the effect on last-moment agreements disappears when disagreements are included in the analysis. Finally, the effect of time-pressure on the frequency of disagreements is stronger for those pairs with higher tension in first proposals.
Open Access
Bargaining, reference points, and limited influence
(Birkhauser, 2020-07) Kara, Tarık; Karagözoğlu, Emin; Özcan-Tok, E.
We study the emergence of reference points in a bilateral, infinite horizon, alternating offers bargaining game. Players’ preferences exhibit reference dependence, and their current offers have the potential to influence each other’s future reference points. However, this influence is limited in that it expires in a finite number of periods. We first construct a subgame perfect equilibrium that involves an immediate agreement and study its properties. Later, we also show the existence of an equilibrium where agreement is reached with delay. We show that expiration lengths and initial reference points play a crucial role for the existence of this equilibrium. For instance, we show that equilibrium with a delayed agreement does not exist when the initial reference point is (0, 0). Finally, we provide comparative static analyses on model parameters, compare two variations of our model, and compare our findings with those of the closest paper to ours, Driesen et al. (Math Soc Sci 64:103–118, 2012).
Open Access
The effects of reference points on fairness judgments
(2014) Akar, Betul
In this study, we empirically investigate the effects of reference points on fairness judgments with the help of the vignette technique. Specifically, we examine (i) whether reference points have influence on fairness judgments or not, (ii) if and how counter-intuitive reference points influence fairness judgments, and (iii) how the asymmetry of reference points shape fairness judgments. For that purpose, we use a within-subject design, in which participants are confronted with three versions of vignette: vignettes without reference point, vignettes with salient reference point, and vignettes with counter-intuitive reference point. Consequently, our findings suggest that (i) the reference points significantly influence fairness judgments, (ii) introducing counter-intuitive reference points moderate the salience of reference points, and (iii) the asymmetry of salient reference points has a concave relationship with fairness judgments, while the asymmetry of counter-intuitive reference points does not affect fairness judgments.
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
Examining proactive strategic decision-making flexibility in new product development
(Wiley-Blackwell Publishing, 2012) Kandemir, D.; Acur, N.
While strategic flexibility is widely accepted as a prerequisite for a firm's success, its application in strategic decision making to a firm's new product development (NPD) activities is limited to only a few studies. Furthermore, many organizations still have difficulties creating proactive strategic flexibility in their decision-making processes. Past research studies have largely ignored the relationship between strategic decision-making flexibility and firms' resources and/or capabilities and success in the context of NPD. This study advances strategic flexibility by adopting the proactive approach of NPD decision-making flexibility and by examining its role in translating organizational resources and capabilities into NPD success. This study draws upon the resources, capabilities (i.e., flexibility), and performance framework to show how proactive strategic decision-making flexibility plays a crucial role in developing new products that can create new opportunities and comply with market needs. Therefore, this research aims to (1) develop an operational definition of strategic decision-making flexibility and (2) propose a framework to understand the drivers and the subsequent new product performance outcomes of strategic decision-making flexibility. This study adopts the proactive perspective of strategic decision-making flexibility and defines it as a capability that enables firms to develop NPD strategies to respond to future changes in the environment. The analysis, based on data collected from 103 European firms, shows that that the effects of long-term orientation, strategic planning, internal commitment, and innovative climate on proactive strategic decision-making flexibility are significant. The findings indicate specifically the roles of both champions and gatekeepers, who infuse a firm's knowledge with a clear understanding of its resources, constraints, and market needs, thereby enhancing decision makers' motivation to behave proactively to precipitate transformation. The results also reveal a positive association between proactive strategic decision-making flexibility and NPD performance outcomes. As such, strategic flexibility provides firms with an ability to adapt to changing environments and to create new market opportunities, product, and technological arenas, and to deliver successful new products. When firms open new market, technological, and product arenas, they can easily foresee their new demands and changes and successfully deliver new products, meeting customer needs/demands, and offering benefits such as quality, cost, and timeliness. This study therefore provides a valuable reference point for future research in strategic decision-making flexibility in NPD.
Open Access
Performance information, production uncertainty, and subjective entitlements in bargaining
(INFORMS, 2015) Karagözoğlu, E.; Riedl, A.
We experimentally explore the effect of performance information and production uncertainties on (i) subjective entitlements derived from the production process and (ii) bargaining over the jointly produced surplus. We hypothesize that performance information and details of the production process affect entitlements, which in turn influence bargaining behavior. We find that, without performance information, subjective entitlements are mostly mutually consistent, and bargaining mainly ends with an equal split. In stark contrast, negotiators derive strong, mutually inconsistent, subjective entitlements when there is performance information. These subjective entitlements affect opening proposals, concessions, and bargaining duration and lead to asymmetric agreements. Moreover, given performance information, endogenous variations in entitlements influence bargaining, suggesting an independent role of subjective entitlements. Production uncertainties influence bargaining, especially when performance information is present, but do not substantially mitigate the effect of entitlements. Theoretical bargaining models allowing for reference points or fairness principles can partly account for the empirical results. Yet, important aspects are left unexplained and our results suggest ways for extending these models. © 2015 INFORMS.
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.