A General Bargaining Model of Legislative Policy-making
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 for all legislators, and delay may be Pareto efficient. We prove existence of stationary equilibria. We show that if all legislators are risk averse or if even limited transfers are possible, then delay is only possible if the status quo lies in the core. Thus, we expect immediate agreement in multidimensional models, where the core is typically empty. 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. Our comparative statics analysis yield two noteworthy insights: moderate status quos imply moderate policy outcomes, and legislative patience implies policy moderation.
Copyright ©2005 now publishers, Inc. Reprinted with permission. MS submitted 16 March 2005; final version received 14 June 2005. Support from the National Science Foundation, grant numbers SES-9975173 and SES-0213738, is gratefully acknowledged. 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. Formerly SSWP 1162.