Bargaining Model: Enhancing the Wealth and Survival of the Poor by Finding a Better Long-term Strategy

Abstract

Inequality and poverty are often associated with irrational behaviour. In previous research a combination of taking risk and using rationale has been suggested as being a good strategy in a setting of iterated bargaining games. By using an agent-based simulation this thesis strives to find a strategy that enhances the wealth and survival of poor agents in comparison to known strategies. This paper claims that there is one combination of strategies that outperforms all other strategies in high cost environments. In this paper I argue that, by taking more risk in gaining more information, one can improve the expected utility maximization and achieve a greater degree of survival.