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The Art of Compromise

Policy is modeled as the outcome of negotiations between two three-party parliamentary states. An election in jurisdiction A determines the composition of the legislature that selects a representative to negotiate an intergovernmental policy agreement with the representative from the legislature of jurisdiction B. Negotiations are modeled using Nash’s (1950) bargaining framework, modified to account for a simultaneous legislative ratification vote. Though agreements favor the legislative representative least willing to compromise, agreements between the bargainers may not follow the ordering of the parties’ ideal policies. An electoral outcome where support for the center party comes from extreme voters may emerge.

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File URL: http://www.wlu.ca/documents/7718/Gallego-Scoones-August-25-2005.pdf
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Paper provided by Wilfrid Laurier University, Department of Economics in its series Working Papers with number eg0042.

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Length: 27
Date of creation: 2005
Date of revision: 2005
Handle: RePEc:wlu:wpaper:eg0042
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  1. Cressman, Ross & Gallego, Maria, 2009. "On the ranking of bilateral bargaining opponents," Mathematical Social Sciences, Elsevier, vol. 58(1), pages 64-83, July.
  2. Crémer, Jacques & Palfrey, Thomas, 2003. "A Voting Model of Federal Standards with Externalities," IDEI Working Papers 182, Institut d'Économie Industrielle (IDEI), Toulouse.
  3. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
  4. Dixit, Avinash & Londregan, John, 1998. "Fiscal federalism and redistributive politics," Journal of Public Economics, Elsevier, vol. 68(2), pages 153-180, May.
  5. BLOCH, Francis & ROTTIER, Stéphane, 1999. "Agenda control in coalition formation," CORE Discussion Papers 1999067, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
  7. David Austen-Smith, 2000. "Redistributing Income under Proportional Representation," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1235-1269, December.
  8. Roger B. Myerson & Daniel Diermeier, 1999. "Bicameralism and Its Consequences for the Internal Organization of Legislatures," American Economic Review, American Economic Association, vol. 89(5), pages 1182-1196, December.
  9. Thomson, W., 1989. "Cooperative Models Of Bargaining," RCER Working Papers 177, University of Rochester - Center for Economic Research (RCER).
  10. Crémer, Jacques & Palfrey, Thomas, 2000. "Federal Mandates by Popular Demand," IDEI Working Papers 120, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2001.
  11. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  12. Levmore, Saul, 1992. "Bicameralism: When are two decisions better than one?," International Review of Law and Economics, Elsevier, vol. 12(2), pages 145-162, June.
  13. Diermeier, Daniel & Merlo, Antonio, 2000. "Government Turnover in Parliamentary Democracies," Journal of Economic Theory, Elsevier, vol. 94(1), pages 46-79, September.
  14. David P. Baron & Daniel Diermeier, 2001. "Elections, Governments, And Parliaments In Proportional Representation Systems," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 933-967, August.
  15. Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 979-1009, October.
  16. Moravcsik, Andrew, 1991. "Negotiating the Single European Act: national interests and conventional statecraft in the European Community," International Organization, Cambridge University Press, vol. 45(01), pages 19-56, December.
  17. Daniel Diermeier & Antoni Merlo, 1999. "An Empirical Investigation of Coalitional Bargaining Procedures," Discussion Papers 1267, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  18. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-18, May.
  19. Alesina, Alberto & Rosenthal, Howard, 1996. "A Theory of Divided Government," Econometrica, Econometric Society, vol. 64(6), pages 1311-41, November.
  20. Kannai, Yakar, 1977. "Concavifiability and constructions of concave utility functions," Journal of Mathematical Economics, Elsevier, vol. 4(1), pages 1-56, March.
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