The Politics of Compromise

Heikki Rantakari and Alessandro Bonatti

No 9910, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A team must select among competing projects that differ in their payoff consequences for its members. Each agent chooses a project and exerts costly effort affecting its random completion time. When one or more projects are complete, agents bargain over which one to implement. A consensus requirement can (but need not) induce the efficient balance between compromise in project selection and equilibrium effort. Imposing deadlines for presenting counteroffers is beneficial, while delegating decision-making to an impartial third party leads agents to select extreme projects. Finally, hiring agents with opposed interests can foster both effort and compromise in project selection.

Keywords: Bargaining; Compromise; Conflict; Consensus; Deadlines; Free-riding (search for similar items in EconPapers)
JEL-codes: C72 D71 D83 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-cdm, nep-gth, nep-mic, nep-pol and nep-ppm
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Citations: View citations in EconPapers (5)

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Journal Article: The Politics of Compromise (2016)
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