Abstract: Two privately-informed players must take a joint action without resorting to side-payments. Size and location of the support of each player's private types (their preferred action) determine the degree of conflict and critically shape the optimal mechanism. When there is a lot of conflict, it is too costly to elicit players' information, which leads to an optimal constant allocation. Delegation arises endogenously when there is conflict and asymmetry in the amount of private information. The player with more private information can dictate the allocation with some bounds. In contrast, an overlap of private information leads to information sharing. In this case, committing to sometimes taking ex-post inefficient actions (money-burning) is optimal. The welfare relative to the first-best is non-monotone in the degree of conflict: as the degree of conflict decreases, the relative welfare is at first decreasing and then increasing.

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