The Microeconomics Seminar: Every Wednesday at 12:15 pm.
Time: 12:15 pm – 1:30 pm
Date: 04th of October 2017
Place: Room 3001.
Santiago OLIVEROS (University of Essex) – “Collective Hold-Up” joint work with Matias Iaryczower

Abstract: We consider a dynamic process of coalition formation in which a principal bargains sequentially with a group of agents. We study the effect of shifting proposal power from the principal to the agents. We show that giving proposal power to agents may have efficiency implications, and can be detrimental to agents’ welfare. The reason for this inefficiency is a collective hold-up problem generated by the fact that agents bargaining later in the process can extract more resources from the principal. This induces delay that destroys surplus and, under some conditions, it an also generate breakdown of negotiations. We also provide conditions under which increasing agents’ proposal power only have distributional effects.

Organizers:
Marie-Laure Allain (CREST – École polytechnique), Pierre Boyer (CREST – École polytechnique) & Laurent Linnemer (CREST – ENSAE ParisTech)
Sponsors:
CREST
Lunch registration:
Link (before 01st of October 2017)