Issue linkage

Issue linkage is often advocated as a powerful mechanism to encourage cooperation on issues where free-riding incentives are significant. The basic idea is to link cooperation on such issues with cooperation on issues that provide (partially) excludable benefits and are therefore less susceptible to free-riding. In this paper, we take a coalition formation approach and study the effects of issue linkage on overall cooperation levels and welfare. We show that, when the linked issues are independent, issue linkage is not necessarily welfare improving; in fact, unless the less critical issue is almost perfectly excludable, issue linkage leads to a welfare loss. By contrast, a generalized enlargement of cooperation and an increase in welfare are obtainable when the linked issues are “complements”. Using concepts from network theory, we further provide insights into the design of cost-effective (minimally connected) linkage architectures when more than two issues are at stake.