Enforceability Reverses the Effect of Bargaining Power on Team Performance

Keisuke Hattori

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Does unequal bargaining power within a team help or hurt its performance? We show that the answer depends on enforceability. Two members who differ only in bargaining power bargain once over a stationary workload allocation for an ongoing production relationship. When negotiated workloads are externally enforced, greater bargaining asymmetry raises team performance. When the agreement must instead be self-enforcing, sufficiently large asymmetry makes the weaker bargainer's workload unsustainable. Restoring her incentive to cooperate contracts both members' efforts and can reduce performance below the equal-power level. Bargaining power therefore has no institution-free performance effect. This reversal is robust to effort complementarity.

Keywords: Bargaining; Team production; Self-enforcing agreements; Workload allocation; Relational contracts (search for similar items in EconPapers)
JEL-codes: C78 D23 D86 L23 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:342595

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