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Dynamic Legislative Bargaining with Veto Power: Theory and Experiments

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  • Nunnari, Salvatore

Abstract

In many domains, committees bargain over a sequence of policies and a policy remains in effect until a new agreement is reached. In this paper, I argue that, in order to assess the consequences of veto power, it is important to take into account this dynamic aspect. I analyze an infinitely repeated divide-the-dollar game with an endogenous status quo policy. I show that, irrespective of legislators' patience and the initial division of resources, policy eventually gets arbitrarily close to full appropriation by the veto player; that increasing legislators' patience or decreasing the veto player's ability to set the agenda makes convergence to this outcome slower; and that the veto player supports reforms that decrease his allocation. These results stand in sharp contrast to the properties of models where committees bargain over a single policy. The main predictions of the theory find support in controlled laboratory experiments.

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  • Nunnari, Salvatore, 2018. "Dynamic Legislative Bargaining with Veto Power: Theory and Experiments," CEPR Discussion Papers 12938, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12938
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    Cited by:

    1. Nunnari, Salvatore, 2021. "Dynamic legislative bargaining with veto power: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 126(C), pages 186-230.
    2. Hülya Eraslan & Kirill S. Evdokimov & Jan Zápal, 2022. "Dynamic Legislative Bargaining," Springer Books, in: Emin Karagözoğlu & Kyle B. Hyndman (ed.), Bargaining, chapter 0, pages 151-175, Springer.
    3. Marina Azzimonti & Laura Karpuska & Gabriel Mihalache, 2023. "Bargaining Over Taxes And Entitlements In The Era Of Unequal Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(3), pages 893-941, August.
    4. Jeon, Jee Seon & Hwang, Ilwoo, 2022. "The emergence and persistence of oligarchy: A dynamic model of endogenous political power," Journal of Economic Theory, Elsevier, vol. 201(C).
    5. Agranov, Marina & Cotton, Christopher & Tergiman, Chloe, 2020. "Persistence of power: Repeated multilateral bargaining with endogenous agenda setting authority," Journal of Public Economics, Elsevier, vol. 184(C).
    6. Aaron Kamm & Simon Siegenthaler, 2024. "Commitment timing in coalitional bargaining," Experimental Economics, Springer;Economic Science Association, vol. 27(1), pages 130-154, March.
    7. Rosenthal, Howard & Zame, William R., 2022. "Sequential referenda with sophisticated voters," Journal of Public Economics, Elsevier, vol. 212(C).
    8. Goerlach, Joseph-Simon & Motz, Nicolas, 2024. "A General Measure of Bargaining Power for Non-cooperative Games," IZA Discussion Papers 16809, Institute of Labor Economics (IZA).
    9. Howell, William & Shepsle, Kenneth & Wolton, Stephane, 2020. "Executive Absolutism: A Model," MPRA Paper 98221, University Library of Munich, Germany.
    10. Seok-ju Cho, 2023. "The Dynamics of Parliamentary Bargaining and the Vote of Confidence," Korean Economic Review, Korean Economic Association, vol. 39, pages 277-314.
    11. Marina Azzimonti & Gabriel P. Mihalache & Laura Karpuska, 2020. "Bargaining over Taxes and Entitlements," NBER Working Papers 27595, National Bureau of Economic Research, Inc.
    12. Chen, Jidong, 2023. "Sequential agenda setting with strategic and informative voting," Journal of Public Economics, Elsevier, vol. 226(C).
    13. Justin Fox & Mattias Polborn, 2021. "On the separation of executive and legislative powers: Executive independence, liberty, and social welfare," Journal of Theoretical Politics, , vol. 33(4), pages 430-454, October.

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    More about this item

    Keywords

    Dynamic legislative bargaining; Endogenous status quo; Veto power; Markov perfect equilibrium; Laboratory experiments;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • 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
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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