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Alliances and negotiations

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  • Manzini, Paola
  • Mariotti, Marco

Abstract

A characteristic of many bargaining situations is that the negotiators represents the interests of a set of parties (trade unions, political parties, etc.) with composite interests, whose bargaining behaviour is regulated by some collective decision mechanism. In this paper we provide a natural model of such circumstances, and show how different preference aggregation procedures within the composite player affect the bargaining outcome. In particular we find that unanimity procedures lead to `more aggressive' behaviour than majority procedures, and that procedures which introduce minimum safeguards for the members of an alliance may result in agreements that are worse than without those safeguards.
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Suggested Citation

  • Manzini, Paola & Mariotti, Marco, 2005. "Alliances and negotiations," Journal of Economic Theory, Elsevier, vol. 121(1), pages 128-141, March.
  • Handle: RePEc:eee:jetheo:v:121:y:2005:i:1:p:128-141
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Haller, Hans & Holden, Steinar, 1997. "Ratification Requirement and Bargaining Power," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 825-851, November.
    3. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, May.
    4. Ponsati, Clara & Sakovics, Jozsef, 1996. "Multiperson Bargaining over Two Alternatives," Games and Economic Behavior, Elsevier, vol. 12(2), pages 226-244, February.
    5. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
    6. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225 Elsevier.
    7. Manzini, Paola & Mariotti, Marco, 2002. "The Effect of Disagreement on Noncooperative Bargaining," Journal of Economic Theory, Elsevier, vol. 107(2), pages 490-499, December.
    8. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
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    Citations

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    Cited by:

    1. Paola Manzini & Marco Mariotti, 2009. "Alliances and negotiations: an incomplete information example," Review of Economic Design, Springer;Society for Economic Design, vol. 13(3), pages 195-203, September.
    2. Elbittar Alexander & Gomberg Andrei & Sour Laura, 2011. "Group Decision-Making and Voting in Ultimatum Bargaining: An Experimental Study," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-33, August.
    3. Philip Bond & Hülya Eraslan, 2010. "Strategic Voting over Strategic Proposals," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 459-490.
    4. Alexander Elbittar & Andrei Gomberg, 2012. ""My friends: it would be an error to accept": Communication and group identity in a bargaining setting," Working Papers 1203, Centro de Investigacion Economica, ITAM.
    5. 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.
    6. Suchan Chae & Paul Heidhues, 2001. "Nash Bargaining Solution with Coalitions and The Joint Bargaining Paradox," CIG Working Papers FS IV 01-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    7. Carraro, Carlo & Sgobbi, Alessandra, 2007. "Modelling Negotiated Decision Making: A Multilateral, Multiple Issues, Non-Cooperative Bargaining Model with Uncertainty," CEPR Discussion Papers 6424, C.E.P.R. Discussion Papers.
    8. Daniel Cardona & Clara Ponsatí, 2015. "Representing a democratic constituency in negotiations: delegation versus ratification," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 399-414, September.
    9. Philip Bond & Hülya Eraslan, 2004. "Strategic Voting over Strategic Proposals, Second Version," PIER Working Paper Archive 07-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 02 Jan 2007.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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