We analyze a stochastic bargaining game in which a new dollar is divided among committee members in each of an infinity of periods. In each period, a committee member is recognized and offers a proposal for the division of the dollar. The proposal is implemented if it is approved by a majority. If the proposal is rejected, then last period’s allocation is implemented. We show existence of equilibrium in Markovian strategies. It is such that irrespective of the initial status quo, the discount factor, or the probabilities of recognition, the proposer extracts the entire dollar in all periods but the initial two. We also derive a fully strategic version of McKelvey’s (1976), (1979) dictatorial agenda setting, so that a player with exclusive access to the formulation of proposals can extract the entire dollar in all periods except the first. The equilibrium collapses when within period payoffs are sufficiently concave. Winning coalitions may comprise players with high instead of low recognition probabilities, ceteris paribus.
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Paper provided by University of Rochester - Wallis Institute of Political Economy in its series Wallis Working Papers with number
WP46.
Length: 39 pages Date of creation: May 2007 Date of revision: Handle: RePEc:roc:wallis:wp46
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Find related papers by JEL classification: C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
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Battaglini, Marco & Palfrey, Thomas R., 2007.
"The dynamics of distributive politics,"
Working Papers
1273, California Institute of Technology, Division of the Humanities and Social Sciences.
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