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Enforceability Reverses the Effect of Bargaining Power on Team Performance

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  • Hattori, Keisuke

Abstract

Does unequal bargaining power within a team help or hurt its performance? We show that the answer depends on enforceability. Two members who differ only in bargaining power bargain once over a stationary workload allocation for an ongoing production relationship. When negotiated workloads are externally enforced, greater bargaining asymmetry raises team performance. When the agreement must instead be self-enforcing, sufficiently large asymmetry makes the weaker bargainer's workload unsustainable. Restoring her incentive to cooperate contracts both members' efforts and can reduce performance below the equal-power level. Bargaining power therefore has no institution-free performance effect. This reversal is robust to effort complementarity.

Suggested Citation

  • Hattori, Keisuke, 2026. "Enforceability Reverses the Effect of Bargaining Power on Team Performance," EconStor Preprints 342595, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:342595
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    References listed on IDEAS

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    1. Jin‐Hyuk Kim & Nick Vikander, 2023. "Commitment and discretion in contracts: theory and evidence from retirement plans," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 461-488, April.
    2. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June.
    3. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, vol. 57(2), pages 447-480, March.
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    Keywords

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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