Parties engaged in bargaining processes often comprise several sub-parties whose preferences are not in complete agreement. For example, the prolonged Uruguay Round of GATT negotiations appears to centre around the confrontation between the US and the European Community over agricultural policy. Much of the difficulty arises from the Community's need to agree first its common negotiating position through a process that is not always cooperative; by the time this compromise is reached, its negotiators at the GATT have much less room for manoeuvre than their US counterparts.

In Discussion Paper No. 685, Executive Committee Member Giorgio Basevi, Research Fellow Flavio Delbono and Marco Mariotti argue that a negotiating party may benefit if its opposition arrives at the negotiations with a proposal reached cooperatively rather than non-cooperatively. They develop a model of the simplest such case, with three agents, two of which constitute a party, which must agree the value of a variable as follows. A (France) and B (Germany), as members of the union, present C (the US) with a proposal, which it then decides whether to accept. A and C have opposite preferences about the possible outcomes, but A and B differ in that A has a direct interest in the specific outcome, while B is only interested in whether there is an agreement or not. B prefers C to accept rather than reject their proposed value but is indifferent between all values if C accepts.

This model captures the common case where a union bargains with an outside party over issues that are of direct concern to only some of its members, while its other members remain concerned that the bargaining process does not break down. For example, Germany has much less interest than France in the outcome of agricultural negotiations but may fear that their breakdown could lead to US restrictions on its exports of manufactured products. Basevi, Delbono and Mariotti conclude that an agent waiting for a proposal from a union of several members, some of whose interests oppose its own, will benefit if at least one member is primarily concerned that an agreement is struck rather than with its terms, and if this member believes the outside agent to be sensitive to changes in the union's proposal. The outside agent need not gain from competition within the union, however, which may make a more `favourable' proposal if there is a `friendly' atmosphere within the union.

They attribute the difficulties of reaching an acceptable resolution of the Uruguay Round to the non-cooperative character of the intra-EC negotiations on agricultural policies. Many factors, including possible enlargement and the shift of leadership from France to Germany, appear to make the EC internally less cooperative than previously, which seems paradoxical given the current process towards deeper economic and monetary integration.