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Inefficiencies in a Model of Team Formation

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  • Prabal Roy Chowdhury

    (Jawaharlal Nehru University)

Abstract

We consider a two period model with complete information involving three agents, two on one side of the market, and one on the other. The agents on the same side of the market bargain, among themselves, over whether to form a team or not, and also with the other agent, either singly or as a team, regarding the payoffs. We characterize the subgame perfect Nash equilibrium of this game. We find that the behavioral assumptions regarding the agents play a critical role in the outcome. If the agents are combative then the outcome is efficient. Whereas if the agents are peace loving, and the discount factor is large, then the outcome may involve delay, as well as (inefficient) team formation.

Suggested Citation

  • Prabal Roy Chowdhury, 2003. "Inefficiencies in a Model of Team Formation," Group Decision and Negotiation, Springer, vol. 12(3), pages 195-215, May.
    • Handle: RePEc:spr:grdene:v:12:y:2003:i:3:d:10.1023_a:1023394616587
    DOI: 10.1023/A:1023394616587
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    References listed on IDEAS

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    Cited by:

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    2. Yi-Chun Chen & Xiao Luo, 2008. "Delay in a bargaining game with contracts," Theory and Decision, Springer, vol. 65(4), pages 339-353, December.

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