Choosing the Rules for Consensus Standardization
35 Pages Posted: 4 May 2009 Last revised: 7 Sep 2013
Date Written: December 8, 2011
Consensus standardization often involves bargaining without side payments or substantive compromise, creating a war of attrition that selects through delay. We investigate the trade-off between screening and delay when this process selects for socially valuable but privately observed quality. Immediate random choice may outperform the war of attrition, or vice versa. Allowing an uninformed neutral player to break deadlocks can improve on both mechanisms. Policies that reduce players' vested interest, and hence delays, can strengthen the ex ante incentive to improve proposals.
Keywords: Consensus, Standards, Compatibility, Innovation
JEL Classification: L15, C78, D71, D83
Suggested Citation: Suggested Citation