The Politics of Collective Principals

Abstract

A group of principals collectively and dynamically screens an agent. The principals hold heterogeneous and evolving values from the relationship. At each date, they use a collective decision rule to determine a joint offer to the agent; the principals may also amend the procedures governing how their joint offer is chosen. Our main result shows how groups of principals voluntarily and permanently concentrate decision-making authority in a single principal. It shows that every equilibrium sequence of procedures converges to the dictatorship of a single principal. (joint with Peter Buisseret, Harvard University)