Bargaining on behalf of a constituency

We study bargaining situations in which one side consists of a group of peo ple, who elect a representative to bargain with another party on their beha lf. A two-phase bargaining model is developed in which a principal-agent pr oblem between the constituency and its representative is embedded. With a n atural refinement of sequential equilibrium, we characterize the set of equ ilibria and examine its efficiency properties. We show that agency problems in the delegation relationship rather than asymmetric information between the two bargainers can cause severe bargaining inefficiency (i.e., delay in reaching agreements). Extensions of the model and applications to union-fi rm bargaining are then discussed briefly. Journal of Economic Literature Cl assification Numbers: C78, D82, J52. (C) Academic Press.