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Formal versus informal legislative bargaining

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  • de Groot Ruiz, Adrian
  • Ramer, Roald
  • Schram, Arthur

Abstract

We study how the formality of a bargaining procedure affects its outcome. We compare a formal Baron–Ferejohn bargaining procedure to an informal procedure where players make and accept proposals in continuous time. Both constitute non-cooperative games corresponding to the same bargaining problem: a three-player median voter setting with an external disagreement point. This allows us to study formality in the presence and absence of a core and provides a natural explanation for the effects of preference polarization. Our results show that polarization hurts the median player and that formality matters. The median player is significantly better off under informal bargaining.

Suggested Citation

  • de Groot Ruiz, Adrian & Ramer, Roald & Schram, Arthur, 2016. "Formal versus informal legislative bargaining," Games and Economic Behavior, Elsevier, vol. 96(C), pages 1-17.
    • Handle: RePEc:eee:gamebe:v:96:y:2016:i:c:p:1-17
    DOI: 10.1016/j.geb.2016.01.004
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    Cited by:

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    5. Wagner, Alexander K. & Granic, Dura-Georg, 2017. "Tie-Breaking Power in Committees," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168187, Verein für Socialpolitik / German Economic Association.
    6. Mariya Teteryatnikova & James Tremewan, 2020. "Myopic and farsighted stability in network formation games: an experimental study," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(4), pages 987-1021, June.

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    More about this item

    Keywords

    Legislative bargaining; Formal bargaining; Informal bargaining; Polarization; Median voter; Core; Uncovered set; Experiment;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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