Ulric B. and Evelyn L. Bray Seminar in Political Economy

Joint with Santiago Oliveros.

We  consider  a  class  of  dynamic  collective  action  problems  in  which  either  a single  principal  or  two  competing  principals  vie  for  the  support  of  members  of  a group.   We  focus  on  the  dynamic  problem  that  emerges  when  agents'  decisions to support an alternative are irreversible,  and agents negotiate and commit their support to the principal sequentially.  A danger for the agents in this context is that a principal may be able to poach agents to her side by exploiting competition among members of the group.  Would agents benefit from introducing competition between opposing principals?  We show that when the principals' policies provide value to the agents, competition generally reduces agents' welfare.  We study applications to endorsements in elections and corporate takeovers.

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