MODEL OF COLLECTIVE ACTIONS. PART 2: LEADING COALITION
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MODEL OF COLLECTIVE ACTIONS. PART 2: LEADING COALITION
Annotation
PII
S042473880000600-9-1
Publication type
Article
Status
Published
Pages
89-104
Abstract

A group of agents able to generate consolidated income by specific private investments (efforts) is considered. A strictly convex function that increases as the value of the investment of each agent increases is used as the value of the expected consolidated income. The agents are familiar with the relation of the expected income to the size of investments. At the same time, each team member pursues only the individual interests and aims to maximize his/her own gain. It is assumed that there may be a small group of agents (coalition) within a team who enjoy a fairly high level of confidence in the other team members and have no other means of influencing their behavior. In order to maximize its own gain and based on its members’ chosen investment strategy, the coalition determines the distribution rule for the consolidated income for all the team members and gives them all the necessary information about this rule and the amounts of their own investments. Agents who are not members of the coalition and who consider this information reliable will accept the coalition’s proposal if the amount of the expected individual gain for each agent exceeds its expected value in an alternative option in the form of the Nash equilibrium. Conditions determining the size and structure of the coalition are found within the model, and when these conditions are met, the Stackelberg equilibrium is Pareto superior to the Nash equilibrium. Connections are made between the individual characteristics of the coalition members and the integral characteristics of every team member both with the coalition size and structure, as well as with the corresponding investment amounts and the values of consolidated and individual gains.

Keywords
collective actions, specific investments, leading coalition, Stackelberg equilibrium, coordination, income distribution
Date of publication
01.10.2017
Number of purchasers
4
Views
933
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0.0 (0 votes)
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References



Additional sources and materials

Holmstrom B. (1982). Moral Hazard in Teams. The Bell Journal of Economics, 13, 2, 324–340.

Kapeljushnikov R. I. (2010). The Multiplicity of Institutional Worlds: The Nobel Prize in Economic Sciences-2009. Preprint WP3/2010/02 (Part 1). Moscow: NRU HSE (in Russian).

Ménard C. (2004). The Economics of Hybrid Organizations. Journal of Institutional and Theoretical Economics, 160, 3, 345–376.

Olson M. 1965. The Logic of Collective Action. Public Goods and the Theory of Groups. Cambridge: Harvard University Press.

Skarzhinskaja E.M., Tsurikov V. I. (2014). On the Efficacy of Collective Action. Russian Management Journal, 12, 3, 87–106 (in Russian).

Skarzhinskaja E.M., Tsurikov V. I. (2017). Collective Action Model. Part 1: Equilibrium, Justice, Efficiency. Economics and Mathematical Methods, 53, 2, 118–133 (in Russian).

Williamson O. I. (1996). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. Saint Petersburg: Lenizdat (in Russian).

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