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Coalition-Preclusion Contracts and Moderate Policies

We examine the effects of a novel political institution, which we call Coalition- Preclusion Contracts, on elections, policies, and welfare. Coalition-Preclusion Contracts enable political parties to credibly commit before the elections not to form a coalition after the elections with one or several other parties specified in the contract. We consider a political game in which three parties compete to form the government and study when contracts of the above type will be written. We find that in most circumstances Coalition-Preclusion Contracts with a single-party exclusion rule defend the interests of the majority by moderating the policies implemented. Moreover, they yield welfare gains for a large set of parameter values. We discuss the robustness of the results in more general settings and study how party-exclusion rules have to be adjusted when more than three parties compete in an election.

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Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 14/195.

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Length: 62 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:eth:wpswif:14-195
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  1. Gersbach, Hans, 2008. "Contractual Democracy," CEPR Discussion Papers 6763, C.E.P.R. Discussion Papers.
  2. Enriqueta Aragonès & Thomas Palfrey & Andrew Postlewaite, 2007. "Political Reputations and Campaign Promises," Journal of the European Economic Association, MIT Press, vol. 5(4), pages 846-884, 06.
  3. Mehmet Ekmekci, 2008. "Manipulation through political endorsements," Discussion Papers 1509, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. repec:cup:cbooks:9780521894753 is not listed on IDEAS
  5. Arianna Degan & Antonio Merlo, 2006. "Do Voters Vote Sincerely? Second Version," PIER Working Paper Archive 07-006, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 03 Jan 2007.
  6. Antonio Merlo & Arianna Degan, 2007. "Do Voters Vote Sincerely?," 2007 Meeting Papers 307, Society for Economic Dynamics.
  7. Marc Debus, 2009. "Pre-electoral commitments and government formation," Public Choice, Springer, vol. 138(1), pages 45-64, January.
  8. Andonie, Costel & Kuzmics, Christoph, 2012. "Pre-election polls as strategic coordination devices," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 681-700.
  9. Siddhartha Bandyopadhyay & Kalyan Chatterjee, 2006. "Coalition Theory and its Applications: A Survey," Economic Journal, Royal Economic Society, vol. 116(509), pages F136-F155, 02.
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