Discussion paper

DP9910 The Politics of Compromise

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.


Bonatti, A (2014), ‘DP9910 The Politics of Compromise‘, CEPR Discussion Paper No. 9910. CEPR Press, Paris & London. https://cepr.org/publications/dp9910