Working Paper: CEPR ID: DP9910
Authors: Alessandro Bonatti; Heikki Rantakari
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 Codes: C72; D71; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| consensus requirement (D70) | equilibrium compromise (D50) |
| consensus requirement (D70) | effort (D29) |
| deadlines for counteroffers (C78) | project selection efficiency (O22) |
| delegating decision-making to an impartial third party (D70) | inefficient outcomes (D61) |
| conflicting goals among agents (D74) | equilibrium compromise (D50) |
| conflicting goals among agents (D74) | effort (D29) |