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Voting in legislative bargaining over cuts to existing benefits versus provision of new benefits

Author

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  • Christiansen, Nels
  • Jhunjhunwala, Tanushree
  • Kagel, John H.

Abstract

The Baron-Ferejohn (1989) legislative bargaining model is experimentally investigated when bargaining over the distribution of new benefits (Gains) versus cuts in existing benefits (Costs). Key comparative static predictions of the model were satisfied in both cases. However, proposers earned more under Costs than Gains, and voters were significantly more likely to accept low offers under Costs, inconsistent with the predictions of both expected utility theory (under risk-neutrality) and prospect theory. A post experiment survey suggesting reasons for this motivated a second set of experimental sessions with increased starting cash balances, which eliminated these differences. Factors underlying both outcomes are discussed.

Suggested Citation

  • Christiansen, Nels & Jhunjhunwala, Tanushree & Kagel, John H., 2025. "Voting in legislative bargaining over cuts to existing benefits versus provision of new benefits," European Economic Review, Elsevier, vol. 176(C).
    • Handle: RePEc:eee:eecrev:v:176:y:2025:i:c:s0014292125000790
    DOI: 10.1016/j.euroecorev.2025.105029
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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