One-to-many bargaining when pairwise agreements are non-renegotiable

Details

Ressource 1Download: One-to-many bargaining with indissoluble agreements.pdf (188.25 [Ko])
State: Public
Version: Author's accepted manuscript
Serval ID
serval:BIB_AB8277A14E61
Type
Article: article from journal or magazin.
Collection
Publications
Title
One-to-many bargaining when pairwise agreements are non-renegotiable
Journal
Journal of Economic Theory
Author(s)
Montez J. V.
ISSN
0022-0531
Publication state
Published
Issued date
07/2014
Peer-reviewed
Oui
Volume
152
Pages
249-265
Language
english
Abstract
We study a model where a central player (the principal) bargains bilaterally with each of several players (the agents) to create and share the surplus of a coalitional game. It is known that, if the payments that were previously agreed (with each of the remaining agents) are renegotiated in case any bilateral negotiation permanently breaks down, then the Shapley value is the unique efficient and individual rational outcome consistent with bilateral Nash bargaining. Here we show that when instead the agreed payments cannot be renegotiated the outcome is also unique but it now coincides with the Nucleolus of an associated bankruptcy problem. We provide a strategic foundation for this outcome. Then we study how such renegotiation affects the principal's payoff according to the properties of the surplus function. We find, for example, that renegotiation benefits the principal when agents are complements and it hurts him when they are substitutes (situations with, respectively, increasing and decreasing marginal contributions).
Keywords
One-to-many bargaining, Pairwise bargaining, Nucleolus
Web of science
Create date
14/11/2016 12:31
Last modification date
20/08/2019 15:15
Usage data