Seminars

Abstract: Competition for positions of power is a common practice in most organizations including legislatures, firms, industry standard boards, and academic departments. We study theoretically and experimentally how different voting rules affect the incentives to compete for the right to propose a distribution of benefits via sequential bargaining. Our experimental findings uncover a novel efficiency trade-off absent in theory: While gridlock is stronger under unanimity, majoritarian bargaining elicits higher competition costs. The gridlock effect mildly dominates initially, but with experience, both rules yield equal efficiency levels challenging a longstanding notion on the preeminence of majoritarian rules. The distribution of benefits is affected by the endogeneity of proposal rights contrary to behavioral expectations: Subjects gravitate towards equitable sharing and proposers often do not keep the lion's share. This behavior stands in sharp contrast to previous bargaining experiments without competition for the right to propose. Our results hold robustly under different bargaining protocols and subject samples.

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