Some Unpleasant Bargaining Arithmetic?
31 Pages Posted: 4 Feb 2014
Date Written: January 3, 2014
It is commonly believed that, since unanimity rule safeguards the rights of each individual, it protects minorities from the possibility of expropriation, thus yielding more equitable outcomes than majority rule. We show that this is not necessarily the case in bargaining environments. We study a multilateral bargaining model à la Baron and Ferejohn (1989), where players are heterogeneous with respect to the potential surplus they bring to the bargaining table. We show that unanimity rule may generate equilibrium outcomes that are more unequal (or less equitable) than under majority rule. In fact, as players become perfectly patient, we show that the more inclusive the voting rule, the less equitable the equilibrium
Keywords: multilateral bargaining, voting rules, inequality
JEL Classification: C78, D70
Suggested Citation: Suggested Citation