# Between anchors and aspirations: a new family of bargaining solutions

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## Abstract

We study the salience and power of reference points in determining the effective anchors and aspirations in bargaining problems. Along this line, we enrich the analysis of the standard bargaining model with two new parameters: the first parameter can be interpreted as the effectiveness (or salience) of the reference point in determining the anchor, whereas the second parameter can be interpreted as its effectiveness in shaping agents’ aspirations. Utilizing these parameters, we provide a unifying framework for the study of bargaining problems with a reference point. The two-parameter family of bargaining solutions we obtain encompasses some well-known solutions as special cases. We offer multiple characterizations for each individual member of this family as well as two characterizations for the whole solution family in bilateral bargaining problems.

## Keywords

Anchors Aspirations Axiomatic approach Bargaining problems Bargaining solutions Disagreement point Reference point## JEL Classification

C72 C78 D63 D74## Notes

### Acknowledgements

We would like to thank two anonymous reviewers and the associate editor for useful comments that improved the paper. We would also like to thank Nejat Anbarci, Irem Bozbay, Thomas Demuynck, Bram Driesen, Tarik Kara, Özgür Kıbrıs, Martin Kocher, Shiran Rachmilevitch, Arno Riedl, and Ismail Sağlam for fruitful discussions and insightful comments. The usual disclaimer applies.

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