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ERIC Number: EJ807925
Record Type: Journal
Publication Date: 2007
Pages: 24
Abstractor: As Provided
ISSN: ISSN-0022-0027
Prospect Theory and Coercive Bargaining
Butler, Christopher K.
Journal of Conflict Resolution, v51 n2 p227-250 2007
Despite many applications of prospect theory's concepts to explain political and strategic phenomena, formal analyses of strategic problems using prospect theory are rare. Using Fearon's model of bargaining, Tversky and Kahneman's value function, and an existing probability weighting function, I construct a model that demonstrates the differences between expected value and prospect theory when applied to strategic interaction. Critically important to this demonstration is an examination of different types of reference points that make sense for bargaining problems. Four types of reference points are discussed and analyzed: power-based, equity, variants of the status quo, and extreme "I-want-it-all" reference points. Each of these types of reference points produce different bargaining behavior at the individual level and in combination with the type of reference point of the other actor. Additionally, I demonstrate that bargaining failure is possible for this model under complete and perfect information using prospect-theoretic logic. (Contains 9 figures, 1 table, and 18 notes.)
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Publication Type: Journal Articles; Reports - Research
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A