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A Bargaining Model of Collective Choice

Banks, Jeffrey S. and Duggan, John (2003) A Bargaining Model of Collective Choice. Social Science Working Paper, 1053. California Institute of Technology , Pasadena, CA. (Unpublished)

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We present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space. In contrast to other bargaining models, the status quo is not assumed to be "bad," and delay may be Pareto efficient. We prove existence of stationary equilibria. The possibility of equilibrium delay depends on four factors: risk aversion of the legislators , the dimensionality of the policy space, the voting rule, and the possibility of transfers across districts. If legislators are risk averse, if there is more than one policy dimension, and if voting is by majority rule, for example, then delay will almost never occur. In one dimension, delay is possible if and only if the status quo lies in the core of the voting rule, and then it is the only possible outcome. This "core selection" result yields a game-theoretic foundation for the well-known median voter theorem. Our comparative statics analysis yield two noteworthy insights: (i) if the status quo is close to the core, t hen equilibrium policy outcomes will also be close to the core (a moderate status quo produces moderate policy outcomes), and (ii) if legislators are patient, then equilibrium proposals will be close to the core (legislative patience leads to policy moderation).

Item Type:Report or Paper (Working Paper)
Related URLs:
URLURL TypeDescription ItemWP 1162
Additional Information:This paper was completed after Jeff Banks's death. I am deeply indebted to him for his friendship and his collaboration on this and many other projects. Support from the National Science Foundation, grant numbers SES-9975173 and SES-0213738, is gratefully acknowledged.
Group:Social Science Working Papers
Funding AgencyGrant Number
Subject Keywords:bargaining, legislatures, status quo, median voter
Series Name:Social Science Working Paper
Issue or Number:1053
Classification Code:JEL: C73, C78, D72, D78
Record Number:CaltechAUTHORS:20170810-171219202
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80273
Deposited By: Jacquelyn Bussone
Deposited On:11 Aug 2017 19:00
Last Modified:03 Oct 2019 18:29

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