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Hanging Together or Hanged Separately: The Strategic Power of Coalitions where Bargaining Occurs with Incomplete Information

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  • Konrad, Kai A.
  • Cusack, Thomas R.

Abstract

What is the strategic role of membership in an intergovernmental group with unanimity requirements if the group negotiates with an external player in a setting with incomplete information? Being in such a group has a strategic effect compared to negotiating as a stand-alone player and reduces the demands of the outside player. Group membership lends additional bargaining power. Negotiating as a group may also cause more inefficiencies due to bargaining failure, and this may harm also the intergovernmental group. We uncover the role of preference alignment and preference independence between members of the coalition group for equilibrium payoffs and welfare effects. In this analysis, we also distinguish between coalition groups with and without side payments. Overall, coalition groups tend to perform well for the members of the coalition group in comparison to fully decentralized negotiations, particularly if the objectives of the members of the coalition group are not always perfectly aligned.

Suggested Citation

  • Konrad, Kai A. & Cusack, Thomas R., 2014. "Hanging Together or Hanged Separately: The Strategic Power of Coalitions where Bargaining Occurs with Incomplete Information," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 58(5), pages 920-940.
    • Handle: RePEc:zbw:espost:191050
    DOI: 10.1177/0022002713487319
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    References listed on IDEAS

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    Cited by:

    1. Vincent Anesi & Peter Buisseret, 2023. "The Politics of Bargaining as a Group," DEM Discussion Paper Series 23-12, Department of Economics at the University of Luxembourg.
    2. Anesti, Vincent & Buisseret, Peter, 2023. "The Politics of Bargaining as a Group," CRETA Online Discussion Paper Series 81, Centre for Research in Economic Theory and its Applications CRETA.

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