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Multi-Issue Bargaining Under Budget-Constraints

Author

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  • Daniel Cardona-Coll

    (Universitat de les Illes Balears)

Abstract

We analyze a multi-issue bargaining model where the joint production of public goods is budget-constrained. The players must decide the part of the budget that is dedicated to produce any public good. We model the decision process as an alternating offer bargaining game with random proposers. The utilities of the players are assumed separable in any public issue. We show that multiple sophisticated outcomes are (generically) attained when a complete agreement is required for a subset of public projects to be implemented, either if the players bargain globally over the sizes of different public goods or sequentially through partial agreements. However, when public projects are immediately implemented after partial agreements, then uniqueness (which is a necessary condition for efficiency) is generically achieved.

Suggested Citation

  • Daniel Cardona-Coll, 2000. "Multi-Issue Bargaining Under Budget-Constraints," Working Papers. Serie AD 2000-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2000-22
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2000-22.pdf
    File Function: Fisrt version / Primera version, 2000
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    References listed on IDEAS

    as
    1. Sakovics, J. & Ponsati, C., 1995. "Rubinstein Batgaining with Tow-Sided Options," UFAE and IAE Working Papers 318.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Daniel Cardona-Coll & Francisco M. Mancera, 2000. "Demand bargaining in legislatures," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(1), pages 163-180.
    3. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    4. Harrington, Joseph E, Jr, 1990. "The Power of the Proposal Maker in a Model of Endogenous Agenda Formation," Public Choice, Springer, vol. 64(1), pages 1-20, January.
    5. Sloth Birgitte, 1993. "The Theory of Voting and Equilibria in Noncooperative Games," Games and Economic Behavior, Elsevier, vol. 5(1), pages 152-169, January.
    6. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, vol. 2(3), pages 224-238, September.
    7. Moulin, Herve, 1994. "Social choice," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 31, pages 1091-1125 Elsevier.
    8. Winter, Eyal, 1997. "Negotiations in multi-issue committees," Journal of Public Economics, Elsevier, vol. 65(3), pages 323-342, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Multilateral bargaining; Sophisticated equilibrium; Issue-by-issue bargaining;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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