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Markov Equilibrium in Models of Dynamic Endogenous Political Institutions

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Author Info
Roger Lagunoff (Georgetown University)

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Abstract

This paper examines existence of Markov equilibria in the class of dynamic political games (DPGs). DPGs are dynamic games in which political institutions are endogenously determined each period. The process of change is both recursive and instrumental: the rules for political aggregation at date t+1 are decided by the rules at date t, and the resulting institutional choices do not affect payoffs or technology directly. Equilibrium existence in dynamic political games requires a resolution to a “political fixed point problem” in which a current political rule (e.g., majority voting) admits a solution only if all feasible political rules in the future admit solutions in all states. If the class of political rules is dynamically consistent, then DPGs are shown to admit political fixed points. This result is used to prove two equilibrium existence theorems, one of which implies that equilibrium strategies, public and private, are smooth functions of the economic state. We discuss practical applications that require existence of smooth equilibria.

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Paper provided by EconWPA in its series Game Theory and Information with number 0501003.

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Length: 30 pages
Date of creation: 26 Jan 2005
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Handle: RePEc:wpa:wuwpga:0501003

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Keywords: Recursive; dynamic political games; political fixed points; dynamically consistent rules.;

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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
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances

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Full references

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. Gradstein, M., 2007. "Institutional Traps and Economic Growth," Cambridge Working Papers in Economics 0769, Faculty of Economics, University of Cambridge. [Downloadable!]
  2. Tasos Kalandrakis, 2007. "Majority Rule Dynamics with Endogenous Status Quo," Wallis Working Papers WP46, University of Rochester - Wallis Institute of Political Economy. [Downloadable!]
  3. George Egorov & Konstantin Sonin, 2005. "The Killing Game: Reputation and Knowledge in Non-Democratic Succession," Economics Working Papers 0054, Institute for Advanced Study, School of Social Science. [Downloadable!]
    Other versions:
  4. Georgy Egorov & Konstantin Sonin, 2005. "The Killing Game: Reputation and Knowledge in Politics of Succession," Game Theory and Information 0505003, EconWPA. [Downloadable!]
  5. Georgy Egorov & Sergei Guriev & Konstantin Sonin, 2006. "Media Freedom, Bureaucratic Incentives, and the Resource Curse," Working Papers w0063, Center for Economic and Financial Research (CEFIR), revised Jun 2006. [Downloadable!]
    Other versions:
  6. John Duggan & Tasos Kalandrakis, 2007. "Dynamic Legislative Policy Making," Wallis Working Papers WP45, University of Rochester - Wallis Institute of Political Economy. [Downloadable!]
  7. William Jack & Roger Lagunoff, 2005. "Social Conflict and Gradual Political Succession: An Illustrative Model," Levine's Bibliography 784828000000000534, UCLA Department of Economics. [Downloadable!]
    Other versions:
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