Does Unequal Bargaining Power Help or Hurt Team Performance?

A short summary of Hattori, K. (2026) “Enforceability Reverses the Effect of Bargaining Power on Team Performance”.

Background

Teams often negotiate who does how much work. Within a team, bargaining power is rarely equal: it varies with voice, presence, seniority, or simply skill at negotiating. A stronger bargainer can reduce her own workload and shift work onto a weaker one.

Does such unequal bargaining power help or hurt team performance?

The answer, this paper shows, is not determined by bargaining power itself. It is reversed by enforceability, that is, by how firmly the negotiated workload can be made to stick. When a manager or a formal rule can compel the agreed allocation, greater bargaining asymmetry raises team performance. But when the agreement can only be sustained by each member’s own willingness to keep cooperating, large asymmetry can lower it.

What the paper does

Consider a team of two members. They are identical in productivity and effort cost, and they differ only in bargaining power in the Nash bargaining problem. Team performance is the sum of the two efforts, and output is shared equally.

Absent an agreement, each member exerts only the effort that is best for herself. But because each benefits from the other’s effort, cooperation can sustain effort above this noncooperative benchmark.

The two members therefore bargain once over a long-run workload: who will exert how much effort in every period. Monetary transfers are unavailable, so a stronger bargainer can claim more surplus only by reducing her own workload and raising her teammate’s.

The paper then compares two enforcement environments.

Under an externally enforced agreement, a manager or formal rule compels the negotiated efforts in every period. A division of roles agreed in a meeting, sustained in practice through supervision, evaluation, and rewards, is an example.

Under a self-enforcing agreement, no outside authority can compel effort, and each member remains free to deviate in any period. What holds the agreement together is that abandoning it forfeits future cooperation. Project-based collaboration, or mutual help among colleagues, where fine-grained effort cannot be fully compelled by contract or instruction, is closer to this case.

What it finds

First, when the negotiated workload is enforceable, greater bargaining asymmetry raises team performance.

Suppose member 1’s bargaining power rises. She reduces her own workload and has member 2 bear more. What matters is that member 2’s increase exceeds member 1’s reduction, so total effort, and therefore team performance, rises. This is of course not good news for member 2, but because the workload is externally enforced, she carries the agreed burden.

Looking at this environment alone, one would conclude that a team works harder with some inequality in roles and voice than with complete equality.

Second, when the workload must instead be self-enforcing, this conclusion reverses.

As the stronger bargainer keeps shifting work onto the weaker one, the weaker member eventually reaches a point where deviating today is better than continuing to comply. The agreed workload becomes unsustainable.

Both members must anticipate this at the bargaining stage. Keeping the weaker member willing to cooperate requires lowering her workload. But lowering hers alone shifts surplus toward her and away from the stronger member, so rebalancing the bargaining solution lowers the stronger member’s workload as well. A deviation problem on one side therefore contracts cooperation throughout the team.

In a self-enforcing team, small asymmetries cause no trouble, but beyond a threshold performance begins to fall. Under some conditions, a team with large bargaining asymmetry performs worse than a team with equal bargaining power.

Third, this is not an artifact of simply adding the two efforts together. The reversal is robust to effort complementarity, where one member’s effort makes the other’s more productive. If anything, complementarity sharpens both effects: it amplifies the workload divergence that bargaining creates, and it makes the weaker member’s sustainability problem bind closer to equality.

Why it matters

The main point is that whether bargaining-power inequality raises or lowers performance depends on how enforceable the agreement is. Bargaining power has no institution-free performance effect, so one cannot conclude in general either that unequal teams are more efficient or that equal teams are.

Performance and distribution also do not move together. Under enforcement, bargaining asymmetry raises performance but lowers the weaker bargainer’s payoff and widens the payoff gap. When the sustainability constraint binds instead, the weaker bargainer cannot be loaded with an excessive workload, so she is better off and the gap narrows, at some cost in performance. If lower payoffs induce dissatisfaction or turnover, the manager’s preferred regime need not maximize current performance.

This research was supported by JSPS KAKENHI Grant Number 24K04912.