Some Unpleasant Bargaining Arithmetic?

31 Pages Posted: 4 Feb 2014

See all articles by Hulya Eraslan

Hulya Eraslan

Rice University

Antonio Merlo

University of Pennsylvania - Department of Economics; Rice University

Date Written: January 3, 2014

Abstract

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

Eraslan, Hulya and Merlo, Antonio M., Some Unpleasant Bargaining Arithmetic? (January 3, 2014). PIER Working Paper No. 14-003, Available at SSRN: https://ssrn.com/abstract=2390103 or http://dx.doi.org/10.2139/ssrn.2390103

Hulya Eraslan

Rice University ( email )

Department of Economics MS-22
Rice University P.O Box 1892
Houston, TX Texas 77251-1892
United States
7133483453 (Phone)

HOME PAGE: http://he6.web.rice.edu/

Antonio M. Merlo (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7933 (Phone)
215-573-2057 (Fax)

HOME PAGE: http://www.ssc.upenn.edu/~merloa

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

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