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Competing for Loyalty: The Dynamics of Rallying Support

Author

Listed:
  • Matias Iaryczower
  • Santiago Oliveros

Abstract

We consider a class of dynamic collective action problems in which either a single principal or two competing principals vie for the support of members of a group. We focus on the dynamic problem that emerges when agents negotiate and commit their support to principals sequentially. We show that competition reduces agents' welfare with public goods, or if and only if there are positive externalities on uncommitted agents, and increases agents' welfare with public bads. We apply the model to the study of corporate takeovers, vote buying, and exclusive deals.

Suggested Citation

  • Matias Iaryczower & Santiago Oliveros, 2017. "Competing for Loyalty: The Dynamics of Rallying Support," American Economic Review, American Economic Association, vol. 107(10), pages 2990-3005, October.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:10:p:2990-3005
    Note: DOI: 10.1257/aer.20150755
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    Cited by:

    1. Johannes Münster & Markus Reisinger, 2021. "Sequencing Bilateral Negotiations with Externalities," ECONtribute Discussion Papers Series 096, University of Bonn and University of Cologne, Germany.
    2. Louis-Sidois, Charles & Musolff, Leon Andreas, 2024. "Buying voters with uncertain instrumental preferences," Theoretical Economics, Econometric Society, vol. 19(3), July.
    3. Meirowitz, Adam & Pi, Shaoting, 2022. "Voting and trading: The shareholder’s dilemma," Journal of Financial Economics, Elsevier, vol. 146(3), pages 1073-1096.
    4. Suchan Chae & Seho Kim, 2019. "The effects of third-party transfers in sequential anchored bargaining," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(1), pages 143-155, March.
    5. Iaryczower, Matias & Oliveros, Santiago, 2016. "Power brokers: Middlemen in legislative bargaining," Journal of Economic Theory, Elsevier, vol. 162(C), pages 209-236.
    6. Chen, Ying & Zápal, Jan, 2022. "Sequential vote buying," Journal of Economic Theory, Elsevier, vol. 205(C).

    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • 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
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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