IDEAS home Printed from https://ideas.repec.org/p/ecl/stabus/2128.html
   My bibliography  Save this paper

Dynamic Coalitions

Author

Listed:
  • Baron, David P.

    (Stanford University)

  • Bowen, T. Renee

    (Stanford University)

Abstract

Policy-making is a dynamic process in which policies can be changed in each period but continue in the absence of new legislation. We study a dynamic legislative bargaining game with an endogenous status quo where in each period a dollar is allocated with a proposal voted against the allocation in the previous period. We characterize for any initial status quo a class of simple Markov perfect equilibria (MPE) with dynamic coalitions, where a dynamic coalition is a decisive set of legislators whose members support the same policy, or set of policies, in at least two consecutive periods. In the basic model a dynamic coalition persists throughout the game, and coalition members share the dollar equally in every period. If uncertainty is associated with the implementation of a policy, there is a continuum of allocations supported by coalition MPE in which the originator of the coalition receives a share larger than the coalition partner receives but smaller than in sequential legislative bargaining theory. These coalition equilibria have the same allocation in every period when the coalition persists, but with positive probability the coalition dissolves due to the uncertainty. Coalition MPE also exists in which members tolerate a degree of implementation uncertainty resulting in coalition allocations that can change from one period to the next. The dynamic coalitions are minimal winning, form in the first period, and, if a coalition dissolves, a new coalition is formed in the next period. The predictions of the theory are compared to experiment results.

Suggested Citation

  • Baron, David P. & Bowen, T. Renee, 2013. "Dynamic Coalitions," Research Papers 2128, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:2128
    as

    Download full text from publisher

    File URL: https://gsbapps.stanford.edu/researchpapers/library/RP2128.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Wioletta Dziuda & Antoine Loeper, 2016. "Dynamic Collective Choice with Endogenous Status Quo," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1148-1186.
    2. Anesi, Vincent, 2010. "Noncooperative foundations of stable sets in voting games," Games and Economic Behavior, Elsevier, vol. 70(2), pages 488-493, November.
    3. Marco Battaglini & Stephen Coate, 2008. "A Dynamic Theory of Public Spending, Taxation, and Debt," American Economic Review, American Economic Association, vol. 98(1), pages 201-236, March.
    4. Marco Battaglini & Thomas Palfrey, 2012. "The dynamics of distributive politics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 49(3), pages 739-777, April.
    5. Duggan, John & Kalandrakis, Tasos, 2012. "Dynamic legislative policy making," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1653-1688.
    6. Richard Mckelvey & Thomas Palfrey, 1998. "Quantal Response Equilibria for Extensive Form Games," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 9-41, June.
    7. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
    8. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2012. "Dynamics and Stability of Constitutions, Coalitions, and Clubs," American Economic Review, American Economic Association, vol. 102(4), pages 1446-1476, June.
    9. Kalandrakis, Anastassios, 2004. "A three-player dynamic majoritarian bargaining game," Journal of Economic Theory, Elsevier, vol. 116(2), pages 294-322, June.
    10. Tasos Kalandrakis, 2010. "Minimum winning coalitions and endogenous status quo," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(4), pages 617-643, October.
    11. Alessandro Riboni & Facundo Piguillem, 2011. "Dynamic Bargaining over Redistribution in Legislatures," 2011 Meeting Papers 1320, Society for Economic Dynamics.
    12. Fr Chette, Guillaume R. & Kagel, John H. & Lehrer, Steven F., 2003. "Bargaining in Legislatures: An Experimental Investigation of Open versus Closed Amendment Rules," American Political Science Review, Cambridge University Press, vol. 97(02), pages 221-232, May.
    13. T. Renee Bowen & Ying Chen & H?lya Eraslan, 2014. "Mandatory versus Discretionary Spending: The Status Quo Effect," American Economic Review, American Economic Association, pages 2941-2974.
    14. Daniel Diermeier & Pohan Fong, 2011. "Legislative Bargaining with Reconsideration," The Quarterly Journal of Economics, Oxford University Press, vol. 126(2), pages 947-985.
    15. Frechette, Guillaume & Kagel, John H. & Morelli, Massimo, 2005. "Nominal bargaining power, selection protocol, and discounting in legislative bargaining," Journal of Public Economics, Elsevier, vol. 89(8), pages 1497-1517, August.
    16. Vincent Anesi & Daniel J Seidmann, 2012. "Bargaining in Standing Committees," Discussion Papers 2012-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    17. Richter, Michael, 2014. "Fully absorbing dynamic compromise," Journal of Economic Theory, Elsevier, vol. 152(C), pages 92-104.
    18. repec:cup:apsrev:v:90:y:1996:i:02:p:316-330_20 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:the:publsh:2215 is not listed on IDEAS
    2. Marina Agranov & Christopher Cotton & Chloe Tergiman, 2016. "Persistence of Power: Repeated Multilateral Bargaining," Working Papers 1374, Queen's University, Department of Economics.
    3. Bowen, T. Renee & Chen, Ying & Eraslan, Hülya & Zápal, Jan, 2017. "Efficiency of flexible budgetary institutions," Journal of Economic Theory, Elsevier, vol. 167(C), pages 148-176.
    4. Anesi, Vincent & Duggan, John, 0. "Existence and indeterminacy of markovian equilibria in dynamic bargaining games," Theoretical Economics, Econometric Society.
    5. Daniel Diermeier & Georgy Egorov & Konstantin Sonin, 2017. "Political Economy of Redistribution," Econometrica, Econometric Society, vol. 85, pages 851-870, May.
    6. Eguia, Jon X. & Shepsle, Kenneth A., 2016. "Legislative Bargaining with Endogenous Rules," CAGE Online Working Paper Series 281, Competitive Advantage in the Global Economy (CAGE).

    More about this item

    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 - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:stabus:2128. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/gsstaus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.