Collective Hold-Up

Iaryczower, Matías; Oliveros, Santiago

doi:10.3386/w29984

Cited by 2 publications

(6 citation statements)

References 33 publications

(74 reference statements)

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“…A natural question is whether our results hold in this modified setting. In Iaryczower and Oliveros (2022), we show that while contingent contracts allow other equilibria, collective hold‐up can still occur. In particular, when agents have all the bargaining power, the unique equilibrium outcomes in the benchmark model is still an equilibrium when transfers are contingent on completion of the project.…”

Section: Discussionmentioning

confidence: 89%

“…In Iaryczower and Oliveros (2022), we consider this extension 21 . The main result of this analysis is that when

z \leq 0

, the inefficiency induced by collective hold‐up can result in inaction, i.e.,

μ^{*} false(q false) = 0

, and not merely delay.…”

Section: Extensionsmentioning

confidence: 99%

“…In Iaryczower and Oliveros (2022), we show that if agents get a larger payoff upon completion when they are in the principal's coalition (

z > w

), the equilibrium for

ϕ > 0

, fixed v , and

δ \to 1

is still efficient, but

b^{*} false(m false) = p^{*} false(m false) = - false(z - w false)

for all

m \in M

. As before, the principal can guarantee herself v , and the agents can guarantee themselves the outside option w .…”

Section: Extensionsmentioning

confidence: 99%

“…1313 An indirect consequence of the assumption that agents obtain the same payoff

z > 0

upon completion independently of whether they committed their support or not is that when

ϕ = 1

, transfers from principals to agents are negative, a feature that can be unappealing in some applications. In Iaryczower and Oliveros (2022), we solve a more general version of the model where we allow payoffs to depend on whether each agent supported the principal or remained uncommitted. We show that most relevant applications involve positive transfers from the principal to agents under reasonable assumptions on parameters, even when the principal has full bargaining power. …”

mentioning

confidence: 99%

“…22 To consider the effect of positive and negative externalities on nontraders, in Iaryczower and Oliveros (2022) we allow the completion payoff for committed and uncommitted agents to differ. In particular, we assume that upon completion, committed agents get

z \in {double-struckR}_{+}

, and uncommitted agents get

w \in double-struckR

, where

w > 0

(

w < 0

) implies that there are positive (negative) externalities on uncommitted agents, and

w = 0

implies that there are no externalities on uncommitted agents. …”

mentioning

confidence: 99%

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Collective hold‐up

Iaryczower

Oliveros

2023

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We consider dynamic processes of coalition formation in which a principal bargains sequentially with a group of agents. This problem is at the core of a variety of applications in economics, including lobbying, exclusive deals, and acquisition of complementary patents. In this context, we study how the allocation of bargaining power between principal and agents affects efficiency and welfare. We show that when the principal's willingness to pay is large relative to agents' payoffs for completion, efficiency requires concentrating bargaining power in the principal. Strengthening the bargaining position of the agents increases inefficient delay and reduces agents' welfare. This occurs in spite of the lack of informational asymmetries or discriminatory offers. When this collective action problem is severe enough, agents are better off when bargaining power is concentrated in the principal.

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Section: Discussionmentioning

confidence: 89%

“…In Iaryczower and Oliveros (2022), we consider this extension 21 . The main result of this analysis is that when