Legislative bargaining and the dynamics of public investment
We present a legislative bargaining model of the provision of a durable public good over an infinite horizion. In each period, there is a societal endowment which can either be invested in the public good or consumed. We characterize the optimal public policy, defined by the time path of investment and consumption. In each period, a legislature with presentatives of each of n districts bargain over the current period's endowment for investment in the public good and transfers to each district. We analyze the Markov perfect equilibrium under different voting q-rules where q is the number of yes votes required for passage. We show that the efficiency of the public policy is increasing in q because higher q leads to higher investment in the public good and less pork. We examine the theoretical equilibrium predictions by conducting a laboratory experiment with fiveperson committees that compares three alternative voting rules: unanimity (q=5); majority (q=3); and dictatorship (q=1).
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: ++49 - 30 - 25491 - 0
Fax: ++49 - 30 - 25491 - 684
Web page: http://www.wzb.eu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Choi, Syngjoo & Gale, Douglas & Kariv, Shachar & Palfrey, Thomas, .
"Network architecture, salience and coordination,"
1291, California Institute of Technology, Division of the Humanities and Social Sciences.
- Kalandrakis, Anastassios, 2004. "A three-player dynamic majoritarian bargaining game," Journal of Economic Theory, Elsevier, vol. 116(2), pages 294-322, June.
- Pedro Dal Bo & Guillaume R. Frochette, 2011.
"The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence,"
American Economic Review,
American Economic Association, vol. 101(1), pages 411-29, February.
- Pedro Dal Bo & Guillaume R. Frechette, . "The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence," Working Papers 2007-7, Brown University, Department of Economics.
- Matthias Messner & Mattias K. Polborn, 2004.
"Voting on Majority Rules,"
Review of Economic Studies,
Oxford University Press, vol. 71(1), pages 115-132.
- Guillaume R. Frechette & John H. Kagel & Massimo Morelli, 2010.
"Pork Versus Public Goods: An Experimental Study of Public Good Provision Within a Legislative Bargaining Framework,"
Economics Working Papers
ECO2010/37, European University Institute.
- Guillaume Fréchette & John Kagel & Massimo Morelli, 2012. "Pork versus public goods: an experimental study of public good provision within a legislative bargaining framework," Economic Theory, Springer, vol. 49(3), pages 779-800, April.
- Choi, Syngjoo & Gale, Douglas & Kariv, Shachar, 2008.
"Sequential equilibrium in monotone games: A theory-based analysis of experimental data,"
Journal of Economic Theory,
Elsevier, vol. 143(1), pages 302-330, November.
- Syngjoo Choi & Douglas Gale & Shachar Kariv, 2006. "Sequential Equilibrium in Monotone Games: Theory-Based Analysis of Experimental Data," Levine's Bibliography 784828000000000278, UCLA Department of Economics.
- Boylan, Richard T & McKelvey, Richard D, 1995. "Voting over Economic Plans," American Economic Review, American Economic Association, vol. 85(4), pages 860-71, September.
- Tasos Kalandrakis, 2010. "Minimum winning coalitions and endogenous status quo," International Journal of Game Theory, Springer, vol. 39(4), pages 617-643, October.
- Boylan, Richard. & Ledyard, John O. & McKelvey, Richard D., .
"Political Competition in a Model of Economic Growth; Some Theoretical Results,"
780, California Institute of Technology, Division of the Humanities and Social Sciences.
- Richard T. Boylan & Richard D. McKelvey & John Ledyard, 1996. "Political competition in a model of economic growth: Some theoretical results (*)," Economic Theory, Springer, vol. 7(2), pages 191-205.
- Daron Acemoglu & Mikhail Golosov & Aleh Tsyvinski, 2007.
"Political Economy of Mechanisms,"
321307000000000886, UCLA Department of Economics.
- Pedro Dal Bó, 2002.
"Cooperation Under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games,"
2002-20, Brown University, Department of Economics.
- Pedro Dal B�, 2005. "Cooperation under the Shadow of the Future: Experimental Evidence from Infinitely Repeated Games," American Economic Review, American Economic Association, vol. 95(5), pages 1591-1604, December.
- Guillaume R. Frechette & John H. Kagel & Steven Lehrer, 2000. "Bargaining in Legislatures: An Experimental Investigation of Open versus Closed Amendment Rules," Econometric Society World Congress 2000 Contributed Papers 1515, Econometric Society.
- Marco Battaglini & Stephen Coate, 2008.
"Fiscal Policy over the Real Business Cycle: A Positive Theory,"
NBER Working Papers
14047, National Bureau of Economic Research, Inc.
- Barseghyan, Levon & Battaglini, Marco & Coate, Stephen, 2013. "Fiscal policy over the real business cycle: A positive theory," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2223-2265.
- B�rd Harstad, 2005. "Majority Rules and Incentives," The Quarterly Journal of Economics, MIT Press, vol. 120(4), pages 1535-1568, November.
When requesting a correction, please mention this item's handle: RePEc:zbw:wzbmbh:spii2011205. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.