The Politics of Compromise

53 Pages Posted: 2 Jun 2014

See all articles by Alessandro Bonatti

Alessandro Bonatti

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Heikki Rantakari

University of Rochester - Simon Business School

Date Written: March 2014

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

JEL Classification: C72, D71, D83

Suggested Citation

Bonatti, Alessandro and Rantakari, Heikki, The Politics of Compromise (March 2014). CEPR Discussion Paper No. DP9910, Available at SSRN: https://ssrn.com/abstract=2444853

Alessandro Bonatti (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Heikki Rantakari

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
520
PlumX Metrics