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The Game of Negotiations: Ordering Issues and Implementing Agreements

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Author Info
Ignatius J. Horstmann (The University of Western Ontario Department of Economics)
Kimberley A. Scharf (The University of Warwick)

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Abstract

Along with the rise in income inequality in the U.S., we have observed a simultaneous move toward fiscal devolution and increased government reliance on private provision of public goods. This paper argues that these phenomena are related. We describe a model of jurisdiction and policy formation in which the structure of government provision is endogenous and public good provision levels are determined by a political process that can exploit private motives for voluntary giving. The model predicts that an increase in income inequality leads to decentralization, with local jurisdictions becoming more income-homogeneous than the population as a whole. This reduction in local income heterogeneity, combined with a reduced tax base, results in increased reliance by government on private provision.

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File URL: http://www.ssc.uwo.ca/economics/econref/workingpapers/researchreports/wp2000/wp2000_11.pdf
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Paper provided by University of Western Ontario, Department of Economics in its series UWO Department of Economics Working Papers with number 200011.

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Date of creation: Mar 2000
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Handle: RePEc:uwo:uwowop:200011

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Inderst, Roman, 2000. "Multi-issue Bargaining with Endogenous Agenda," Games and Economic Behavior, Elsevier, vol. 30(1), pages 64-82, January. [Downloadable!] (restricted)
  2. Busch, Lutz-Alexander & Wen, Quan, 1995. "Perfect Equilibria in Negotiation Model," Econometrica, Econometric Society, vol. 63(3), pages 545-65, May. [Downloadable!] (restricted)
    Other versions:
  3. Clara Ponsati & Joel Watson, 1994. "Multiple-Issue Bargaining and Axiomatic Solutions," University of California at San Diego, Economics Working Paper Series 94-14, Department of Economics, UC San Diego.
    Other versions:
  4. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  5. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 54(3), pages 345-64, July. [Downloadable!] (restricted)
  6. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Blackwell Publishing, vol. 56(1), pages 59-76, January. [Downloadable!] (restricted)
  7. Rubinstein, Ariel, 1985. "A Bargaining Model with Incomplete Information about Time Preferences," Econometrica, Econometric Society, vol. 53(5), pages 1151-72, September. [Downloadable!] (restricted)
  8. Lutz-Alexander Bush & Shouyong Shi & Quan Wen, 1998. "Bargaining with Surplus Destruction," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 915-932, November. [Downloadable!] (restricted)
  9. Perry, Motty, 1986. "An Example of Price Formation in Bilateral Situations: A Bargaining Model with Incomplete Information," Econometrica, Econometric Society, vol. 54(2), pages 313-21, March. [Downloadable!] (restricted)
  10. Bac, Mehmet & Raff, Horst, 1996. "Issue-by-Issue Negotiations: The Role of Information and Time Preference," Games and Economic Behavior, Elsevier, vol. 13(1), pages 125-134, March. [Downloadable!] (restricted)
  11. Cho, In-Koo, 1987. "A Refinement of Sequential Equilibrium," Econometrica, Econometric Society, vol. 55(6), pages 1367-89, November. [Downloadable!] (restricted)
  12. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April. [Downloadable!] (restricted)
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  13. Busch, Lutz-Alexander & Horstmann, Ignatius, 1997. "A Comment on Issue-by-Issue Negotiations," Games and Economic Behavior, Elsevier, vol. 19(1), pages 144-148, April. [Downloadable!] (restricted)
  14. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May. [Downloadable!] (restricted)
  15. Lutz-Alexander Busch & Ignatius Horstmann, 1999. "Endogenous Incomplete Contracts: A Bargaining Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 956-975, August. [Downloadable!] (restricted)
  16. Kalai, Ehud, 1977. "Proportional Solutions to Bargaining Situations: Interpersonal Utility Comparisons," Econometrica, Econometric Society, vol. 45(7), pages 1623-30, October. [Downloadable!] (restricted)
    Other versions:
  17. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-52, March. [Downloadable!] (restricted)
    Other versions:
  18. Sanford J. Grossman & Motty Perry, 1986. "Sequential Bargaining Under Asymmetric Information," NBER Technical Working Papers 0056, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. Haller, Hans & Holden, Steinar, 1990. "A letter to the editor on wage bargaining," Journal of Economic Theory, Elsevier, vol. 52(1), pages 232-236, October. [Downloadable!] (restricted)
  20. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, vol. 2(3), pages 224-238, September. [Downloadable!] (restricted)
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  21. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine. [Downloadable!]
  22. Avery Christopher & Zemsky Peter B., 1994. "Money Burning and Multiple Equilibria in Bargaining," Games and Economic Behavior, Elsevier, vol. 7(2), pages 154-168, September. [Downloadable!] (restricted)
  23. Inderst, Roman, 1998. "Multi-Issue Bargaining with Endogenous Agenda," Sonderforschungsbereich 504 Publications 98-35, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. L.-A. Busch & A. Muthoo, 2003. "Power and Inefficient Institutions," Economics Discussion Papers 561, University of Essex, Department of Economics. [Downloadable!]
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