Risk aversion
Named by 2 essays across one field — each of them below, with the objects they name alongside it.
Two auctions that earn the same
In one sealed-bid auction the winner pays its own bid; in the other it pays the second-highest bid. Bidders behave completely differently — in the second they bid what the object is worth to them, in the first they shade their bids down by exactly a fraction — and the seller's revenue is spread differently. Yet the seller expects to collect precisely the same amount, (n − 1)/(n + 1) for n bidders with values spread evenly, and so does an auction in which everybody pays. The equality breaks the moment bidders dislike risk, and it says nothing about how much a reserve price can add.
Haggling that ends at the largest product
Two people split a sum by making offers in turn, each refusal costing both of them a little time. Rubinstein proved in 1982 that the game has exactly one sensible outcome, reached at once — and as the delay between offers shrinks, it is the split that maximises the product of what each gets, the rule Nash had laid down as an axiom thirty years before.
Named alongside it
The objects these essays reach for when they reach for this one.
AuctionBackward inductionBargainingDiscountingExpectationFair divisionNash equilibriumNash welfareOrder statisticsOutside optionPrivate informationRevenue equivalence