A bargaining model of legislative policy-making

Abstract

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, then 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).

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