Stable unions

Yaron Azrieli and Dan Levin ()

Economic Theory, 2020, vol. 69, issue 2, No 3, 337-365

Abstract: Abstract We study the informational incentive for agents (individuals, firms, countries) to form a union. In our model agents’ utilities have both private and common value components. The decisions of a union aggregate members’ signals regarding the realized state of nature and therefore increase the common value component, but at the same time agents cannot tailor the decision to their own preferences which decreases the private value component. We characterize environments in which unions are stable, i.e. in which no subgroup of members benefits from leaving the union, and study how stability depends on the various parameters of the model.

Keywords: Voting; Information aggregation; Stability; Group decision making (search for similar items in EconPapers)
JEL-codes: D72 D82 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s00199-018-1165-1

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