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Stable unions

Author

Listed:
  • Yaron Azrieli

    (The Ohio State University)

  • Dan Levin

    (The Ohio State University)

Abstract

We study the informational incentive for agents (individuals, firms, countries) to form a union. In our model agents’ utilities have both private and common value components. The decisions of a union aggregate members’ signals regarding the realized state of nature and therefore increase the common value component, but at the same time agents cannot tailor the decision to their own preferences which decreases the private value component. We characterize environments in which unions are stable, i.e. in which no subgroup of members benefits from leaving the union, and study how stability depends on the various parameters of the model.

Suggested Citation

  • Yaron Azrieli & Dan Levin, 2020. "Stable unions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(2), pages 337-365, March.
    • Handle: RePEc:spr:joecth:v:69:y:2020:i:2:d:10.1007_s00199-018-1165-1
    DOI: 10.1007/s00199-018-1165-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Voting; Information aggregation; Stability; Group decision making;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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