On the consistency of a gambler with time preference

Prakash, Prem

doi:10.1016/0022-0531(77)90068-0

Cited by 5 publications

(3 citation statements)

References 7 publications

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“…Defining the disagreement payoff to DM2 similarly, the split determined by the Nash bargaining solution at A = a is the pair s 1 a v − s 1 a that maximizes A follow-up paper by Prakash (1977) shows that a von Neumann and Morgenstern (1947) consistent preference relation has the property that time discounting and risk adjustment are interchangable; we make use of this result. Fishburn and Rubinstein (1982) further develop the model for the special case of discounted expected utility with constant discounting and instantaneous risk aversion.…”

Section: Rolling Back the Nash Bargaining Solutionmentioning

confidence: 99%

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Embedded Nash Bargaining: Risk Aversion and Impatience

Lippman

McCardle

2012

Decision Analysis

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I n telling the tale of, and analyzing the decisions made by, an heir claimant to a large fortune, Lippman and McCardle (2004) introduce embedded Nash bargaining, an approach to modeling joint decision making. They embed several bargaining games in a joint decision tree and calculate the expected payoffs to the two sides if the Nash bargaining solution is used to generate the intermediate payoffs from bargaining. The purpose of the current paper is to provide theoretical underpinnings for that approach: we establish some general results regarding the existence, uniqueness, and comparative statics (with respect to costs, risk aversion, and time discounting) of the embedded Nash bargaining solution. In particular, when the disagreement payoff is random, we show that a decision maker's embedded Nash bargaining payoff decreases with both his risk aversion and impatience, and it increases with his opponent's risk aversion and impatience.

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Section: Rolling Back the Nash Bargaining Solutionmentioning

confidence: 99%

“…Thompson (1994) provides an excellent review of the cooperative bargaining literature. For the basics on intertemporal preferences, see Nachman (1975), Prakash (1977), and Fishburn and Rubinstein (1982).…”

Section: Introductionmentioning

confidence: 99%

Embedded Nash Bargaining: Risk Aversion and Impatience

Lippman

McCardle

2012

Decision Analysis

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“…The decision maker receives one outcome, at one point in time, but this timed outcome is risky. The timed risks framework has been used before (Nachman 1975;Prakash 1977;Fishburn and Rubinstein 1982;DeJarnette et al 2020;Ebert 2020) and its simplified structure makes it a suitable testing ground for developing preference conditions that clarify the normative and empirical content of EEDU. The timed risk framework lends itself to various economic applications.…”

Section: Introductionmentioning

confidence: 99%

Dynamic preference foundations of expected exponentially-discounted utility

Webb

2023

Econ Theory

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Expected exponentially-discounted utility (EEDU) is the standard model of choice over risk and time in economics. This paper considers the dynamic preference foundations of EEDU in the timed risks framework. We first provide dynamic preference foundations for a time-invariant expected utility representation. The new axioms for this are called foregone-risk independence and strong time invariance. This class of dynamic preferences includes EEDU as a special case. If foregone-risk independence is strengthened to a new condition called conditional consistency, then an EEDU representation results. Alternative approaches for extending exponential discounting axioms to risk are considered, resulting in five new preference foundations of EEDU.

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„Unternehmensbewertung unter Unsicherheit“, oder: Theoriedefizit einer künstlichen Diskussion über Sicherheitsäquivalent- und Risikozuschlagsmethode

Kürsten

2002

Schmalenbachs Z betriebswirtsch Forsch

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On the consistency of a gambler with time preference

Cited by 5 publications

References 7 publications

Embedded Nash Bargaining: Risk Aversion and Impatience

Embedded Nash Bargaining: Risk Aversion and Impatience

Dynamic preference foundations of expected exponentially-discounted utility

„Unternehmensbewertung unter Unsicherheit“, oder: Theoriedefizit einer künstlichen Diskussion über Sicherheitsäquivalent- und Risikozuschlagsmethode

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