Orchestrating Organizational Politics: Baron and Ferejohn Meet Tullock

TL;DR

This paper models organizational decision-making as a sequential bargaining game with voting rules and recognition costs, showing that a dictatorial voting rule often optimizes diverse objectives.

Contribution

It introduces a novel framework combining voting rules and biased recognition contests to determine optimal organizational rules for surplus division.

Findings

Dictatorial voting rules often yield optimal outcomes.

The model simplifies to a biased contest under certain conditions.

Optimal rules depend on the specific design objectives.

Abstract

This paper examines the optimal organizational rules that govern the process of dividing a fixed surplus. The process is modeled as a sequential multilateral bargaining game with costly recognition. The designer sets the voting rule -- i.e., the minimum number of votes required to approve a proposal -- and the mechanism for proposer recognition, which is modeled as a biased generalized lottery contest. We show that for diverse design objectives, the optimum can be achieved by a dictatorial voting rule, which simplifies the game into a standard biased contest model.