Research Seminar MicroeconomicsCollective Hold-UpMatias Iaryczower (Princeton University)

24 October 2019

The Microeconomics Research Seminar welcomes Matias Iaryczower (Princeton University), who will present his work on

"Collective Hold-Up".
Place: VMP 9, S28

Hour: 17:15 - 18:45
We are looking forward to seeing you there!

Abstract

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 and politics, including a lobbyist seeking to pass a bill, an entrepreneur setting up a start-up, or a firm seeking the approval of corrupt bureaucrats. We show that when the principal’s willingness to pay is high, strengthening the bargaining position of the agents generates 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 prefer to give up considerable bargaining power in favor of the principal.