Risk aversion for losses and the Nash bargaining solution

Hans Peters*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Web of Science)

Abstract

We call a decision maker risk averse for losses if that decision maker is risk averse
with respect to lotteries having alternatives below a given reference alternative in
their support. A two-person bargaining solution is called invariant under risk
aversion for losses if the assigned outcome does not change after correcting for risk
aversion for losses with this outcome as pair of reference levels, provided that the
disagreement point only changes proportionally. We present an axiomatic characterization of the Nash bargaining solution based on this condition, and we also
provide a decision-theoretic characterization of the concept of risk aversion for
losses.
Original languageEnglish
Pages (from-to)703-715
Number of pages13
JournalTheory and Decision
Volume92
Issue number3-4
Early online date2021
DOIs
Publication statusPublished - Apr 2022

Keywords

  • risk aversion
  • loss aversion
  • risk aversion for losses
  • Nash bargaining

Cite this