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Dynamic Collective Choice with Endogenous Status Quo

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  • Wioletta Dziuda
  • Antoine Loeper

Abstract

This paper analyzes an ongoing bargaining situation in which i) preferences evolve overtime, ii) the interests of individuals are not perfectly aligned, and iii) the previous agreement becomes the next status quo and determines the payoffs until a new agreement is reached. We show that the endogeneity of the status quo exacerbates the players’ conflict of interest and decreases the responsiveness of the bargaining outcome to the environment. Players with arbitrarily similar preferences can behave as if their interests were highly discordant. When players become very patient, the endogeneity of the status quo can bring the negotiations to a complete gridlock. Under mild regularity conditions, fixing the status quo throughout the game via an automatic sunset provision improves welfare. The detrimental effect of the endogeneity of the status quo can also be mitigated by concentrating decision rights, for instance, by lowering the supermajority requirement.

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Bibliographic Info

Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1514.

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Date of creation: 26 Oct 2010
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Handle: RePEc:nwu:cmsems:1514

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Related research

Keywords: Dynamic voting; endogenous status quo; supermajority; partisanship; polarization; policy inertia; sunset provision JEL Classification Numbers: C73; D72; D78;

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  1. Villas-Boas, J. Miguel, 1997. "Comparative Statics of Fixed Points," Journal of Economic Theory, Elsevier, vol. 73(1), pages 183-198, March.
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Cited by:
  1. Vincent Anesi & Daniel J Seidmann, 2012. "Bargaining over an Endogenous Agenda," Discussion Papers 2012-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Facundo Piguillem & Alessandro Riboni, 2013. "Spending Biased Legislators - Discipline Through Disagreement," EIEF Working Papers Series 1317, Einaudi Institute for Economics and Finance (EIEF), revised Jul 2013.
  3. T. Renee Bowen & Ying Chen & Hülya Eraslan, 2012. "Mandatory Versus Discretionary Spending: the Status Quo Effect," Economics Working Paper Archive 603, The Johns Hopkins University,Department of Economics.
  4. Baron, David P. & Bowen, T. Renee, 2013. "Dynamic Coalitions," Research Papers 2128, Stanford University, Graduate School of Business.

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