Does Compromise Solve All Conflicts?

ROCHESTER, N.Y., July 18, 2016 /PRNewswire/ -- With the Republican National Convention starting today, controversy around the final candidate selection couldn't be more intense. Many in the GOP fear a Donald Trump candidacy will mean losing the election, and they are relying on their members to develop a solution to the problem. In this setting, there are no readily available solutions (i.e., the perfect candidate or the right policy). Instead, GOP members must invest time and effort developing potential solutions, and there may be conflicting preferences over the feasible alternatives: which candidate to pick over Trump, or which set of policies to include in the party platform. Members must ultimately come to an agreement over which proposed solution to adopt.

While many believe compromise can solve problems, new research from the Simon Business School at the University of Rochester shows that the more a member of a particular group is forced to compromise, the less interested they are in the success of the project. Such disinterest leads to inefficient effort, so in the end there may be limited solutions to choose from in the first place.

The research titled "The Politics of Compromise" examines how the voting and other procedural rules can be used to balance the value created by the adopted proposal and the members' interests to work on developing them.

"Requiring too much consensus in a group can stifle the process," says Heikki Rantakari, assistant professor of economics at Simon Business School and co-author of the study. "When too many people with differing interests need to agree, that will discourage people - an alternative that would be acceptable to the group as a whole will no longer represent their own interests enough to be worth working on."

Rantakari and his co-author, Alessandro Bonatti from Massachusetts Institute of Technology Sloan School of Business, published the research this year in the American Economic Review. They found that not only can consensus lead to inefficient effort, but the expectation of highly controversial negotiations in the future may lead the members of a group to accept mediocre alternatives.

"Individuals are unwilling to invest time and effort if they expect it to be wasted," says Rantakari, "Therefore, whoever has a proposal even moderately acceptable and available now, may be able to build an immediate, even if begrudging, consensus around it."

In contrast, requiring fewer consensuses for approval can foster competition among the members to provide viable alternatives and better proposals. In the future, this can help create more stringent standards on what proposals or projects are acceptable.

Finally, it is important to note that additional information is often learned during the development process, creating benefits to collecting multiple alternatives before making a final selection. Therefore, the examination of the optimal termination of alternative projects in these types of environments is a promising area of future research.

To learn more about the cutting-edge research being conducted at Simon Business School, please visit www.simon.rochester.edu.

About Simon Business School

The Simon Business School is currently ranked among the leading graduate business schools in the world in rankings published by the popular press, including Bloomberg Businessweek, U.S. News & World Report, and the Financial Times. The Financial Times recently rated the School No. 9 in the world for finance. More information about Simon Business School is available at www.simon.rochester.edu.

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