We first generalize the Nash bargaining solution to the case where decision makers are not necessarily expected utility (EU) maximizers. We suggest two different approaches and show that the two extensions coincide when the preferences are of the EU and the rank dependent utility (RDU) types. The extensions differ in the case of weighted utility (WU) preferences. We also investigate the sensitivity of the extensions to changes in the degree of risk aversion. When the first extension is considered, the existing results depend on the EU assumption; for more general preferences the solutions depend on the concavity of the certainty utilities. When the second extension is considered the well-known EU results remain unchanged. Journal of Economic Literature Classification Numbers: 022, 026.
|Number of pages||19|
|Journal||Games and Economic Behavior|
|State||Published - Apr 1993|