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Some Unpleasant Bargaining Arithmetics?

Author

Listed:
  • Antonio Merlo

    (University of Pennsylvania)

  • Hulya Eraslan

    (Johns Hopkins University)

Abstract

t is commonly believed that, contrary to majority rule, unanimity rule safeguards the rights of each individual, and hence protects minorities from the possibility of expropriation. We show that this is not necessarily the case in bargaining environments. We study a multilateral bargaining model where players have access to different technologies for the production of a "cake." Which cake is produced and how it is allocated are determined collectively through voting. We show that it is possible for unanimity rule to generate equilibrium outcomes that are more unequal (or less equitable) than equilibrium outcomes under majority rule. In fact, there exist conditions under which in the unique equilibrium under unanimity rule only one player receives a positive expected payoff, while the expected payoff of all players in the unique equilibrium under majority rule is positive. We explore the general trade-offs between equity and efficiency for a class of bargaining games, and establish a number of results that pertain to the issue of inequality of equilibrium allocations across different voting rules.

Suggested Citation

  • Antonio Merlo & Hulya Eraslan, 2009. "Some Unpleasant Bargaining Arithmetics?," 2009 Meeting Papers 279, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:279
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    References listed on IDEAS

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    Cited by:

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    3. Kawamori, Tomohiko, 2022. "Coalition-then-allocation legislative bargaining," Journal of Mathematical Economics, Elsevier, vol. 99(C).
    4. Agustín Casas & Martín Gonzalez-Eiras, 2021. "Cooperation and Retaliation in Legislative Bargaining," Working Papers 95, Red Nacional de Investigadores en Economía (RedNIE).
    5. Li, Shuwen & Houser, Daniel, 2022. "Stochastic bargaining in the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 687-715.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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