Agenda-setting Power in Organizations with Overlapping Generations of Players

This paper presents an analysis of the allocation of agenda-setting (or bargaining) power in organizations with overlapping generations of players. Such powers are typically institutionalized within an organization’s structure, and, given the focus of this paper, we identify the former with the latter. Our analysis concerns organizations (such as the US Senate) in which the number of periods each player participates is endogenously determined by his or her past performance. We derive several results and insights concerning (i) optimal organizational structure and (ii) conditions under which the unique, dynamically optimal outcome can be sustained (in equilibrium) in organizations with suboptimal structures. For example, we show that under a broad set of conditions, the optimal organizational structure should involve a seniority system, in which most of the agenda-setting power is allocated to the oldest generation of players. “The future is purchased by the present; it is not possible to secure distant or permanent happiness but by the forbearance of some immediate gratification.” Samuel Johnson