Hanging Together or Being Hung Separately: The Strategic Power of Coalitions where Bargaining Occurs with Incomplete Information
AbstractWhat is the strategic role of membership in an intergovernmental group with unanimity requirements if the group negotiates with an external player in a setting with incomplete information? Being in such a group has a strategic effect compared to negotiating as a standalone player and reduces the demands of the outside player: being in a group lends additional bargaining power. Negotiating as a group may also cause more inefficiencies due to bargaining failure, and this may harm also the intergovernmental group. We uncover the role of preference alignment and preference independence between members of the coalition group for equilibrium payoffs and welfare effects. In this analysis we also distinguishing between coalition groups with and without side payments. Overall, coalition groups tend to perform well for the members of the coalition group in comparison to fully decentralized negotiations, particularly if the objectives of the members of the coalition group are not always perfectly aligned. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79967.
Date of creation: 2013
Date of revision:
Other versions of this item:
- Konrad, Kai A. & Cusack, Thomas R., 2013. "Hanging together or being hung separately: The strategic power of coalitions where bargaining occurs with incomplete information," Discussion Papers, Research Unit: Market Behavior SP II 2013-202, Social Science Research Center Berlin (WZB).
- Kai A. Konrad & Thomas R. Cusack, 2013. "Hanging Together or Being Hung Separately: The Strategic Power of Coalitions where Bargaining Occurs with Incomplete Information," CESifo Working Paper Series 4071, CESifo Group Munich.
- F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
- F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
- F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-CDM-2014-02-02 (Collective Decision-Making)
- NEP-MIC-2014-02-02 (Microeconomics)
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