The Politics of Compromise

Alessandro Bonatti and Heikki Rantakari

American Economic Review, 2016, vol. 106, issue 2, 229-59

Abstract: An organization must select among competing projects that differ in their payoff consequences for its members. Each agent chooses a project and exerts effort affecting its completion time. When one or more projects are complete, the agents select which one to adopt. The selection rule for multiple projects that maximizes ex post welfare leads to inefficiently high polarization; rules that favor later proposals improve upon ex post optimal selections. The optimal degree of favoritism increases in the cost of effort and discount rate. This trade-off informs the design of process rules in standard-setting organizations and helps explain their performance. (JEL C78, D23, D71, D72, D83, L15)

JEL-codes: C78 D23 D71 D72 D83 L15 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20140316
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Citations: View citations in EconPapers (22)

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Working Paper: The Politics of Compromise (2014)
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