Bargaining, Reference Points, and Limited Influence<\/p>\n
Assoc. Prof. Emin Karag\u00f6zo\u011flu, Department of Economics, Bilkent University<\/p>\n
March 6, Friday, 1:40 p.m.
\nEA-409<\/p>\n
We study the emergence of reference points in a bilateral, infinite horizon, alternating offers bargaining game. Players\u2019 preferences exhibit reference-dependence, and their current offers have the potential to influence each other\u2019s 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. More precisely, we show that equilibrium with a delayed agreement does not exist under unlimited influence or when the initial reference point is (0, 0). Finally, we provide comparative static analyses on loss-aversion and gain-seekingness parameters, compare two variations of our model, and compare our findings with those of the closest paper to ours, Driesen, Peters, and Perea (2012).
\nDr. Karag\u00f6zo\u011flu received his PhD degree from Maastricht University in 2010 with his thesis on bargaining and claim problems. Broadly speaking, his fields of expertise are game theory, experimental economics, and behavioral economics. He joined Bilkent University, Department of Economics in 2010. He taught courses on microeconomic theory, game theory, and bargaining theory and experiments in various universities. In his current research, Dr. Karag\u00f6zo\u011flu investigates fairness judgments, focal\/reference points, time pressure, joint production, roles of effort vs luck, complementarity of inputs, transaction costs, and arbitration in bargaining games\/problems. His articles appeared in journals such as Management Science, Games and Economic Behavior, Experimental Economics, Journal of Economic Behavior and Organization, Annals of Operations Research, Mathematical Methods of Operations Research, Group Decision and Negotiation, Mathematical Social Sciences, Operations Research Letters, and Theory and Decision. Dr. Karag\u00f6zo\u011flu has visited and conducted research at institutions such as Harvard University, MIT, Boston University, LMU Munich, University of Nottingham, University of Innsbruck, Maastricht University, Ruhr University of Bochum, and University of East Anglia. He is a CESifo-Munich research affiliate, recipient of The Science Academy\u2019s Distinguished Young Scientist Award (2015) and Bilkent University\u2019s Distinguished Teaching Award (2015). Dr. Karag\u00f6zo\u011flu\u2019s hobbies include reading about paradoxes in epistemology and probability theory, cognitive\/neuro psychology, and literature; cooking, watching movies, auto motorsports, and football.<\/p>\n","protected":false},"excerpt":{"rendered":"
Bargaining, Reference Points, and Limited Influence Assoc. Prof. Emin Karag\u00f6zo\u011flu, Department of Economics, Bilkent University March 6, Friday, 1:40 p.m. EA-409 We study the emergence of reference points in a bilateral, infinite horizon, alternating offers bargaining game. Players\u2019 preferences exhibit reference-dependence, and their current offers have the potential to influence [\u2026] <\/p>\n