Bargaining Foundations of the Median Voter Theorem

We provide game-theoretic foundations for the median voter theorem in a one-dimensional bargaining model based on Baron and Ferejohn’s (1989) model of distributive politics. We prove that, as the agents become arbitrarily patient, the set of proposals that can be passed in any subgame perfect equilibrium collapses to the median voter’s ideal point. While we leave the possibility of some delay, we prove that the agents’ equilibrium continuation payoffs converge to the utility from the median, so that delay, if it occurs, is inconsequential. We do not impose stationarity or any other refinements. Our result counters intuition based on the folk theorem for repeated games, and it contrasts with the known result for the distributive bargaining model that, as agents become patient, any division of the dollar can be supported as a subgame perfect equilibrium outcome.

Non-cooperative Support for the Asymmetric Nash Bargaining solution

Our work contributes to the game-theoretic analysis of bargaining by providing additional non-cooperative support to the well-known Nash bargaining solution. In particular, in the present paper we study a model of non-cooperative multilateral bargaining with a very general proposer selection protocol and set of feasible payoffs. In each period of the bargaining game, one out of n players is recognized as the proposer according to an irreducible Markov process. The proposer offers a particular element of the convex set of feasible payoffs. If all players accept the offer, it is implemented. If a player rejects the offer, with some probability the negotiations break down and with the remaining probability the next period starts. We show that subgame perfect equilibria in stationary strategies exist and we fuly characterize the set of such equilibria. Our main result is that in the limit, as the exogenous risk of breakdown goes to zero, stationary subgame perfect equilibrium payoffs converge to the weighted Nash bargaining solution with the stationary distribution of the Markov proposer selection process as the weight vector.operations research and management science;

Willingness to Pay and Political Support for a U.S. National Clean Energy Standard

In 2010 and 2011, Republicans and Democrats proposed mandating clean power generation in the electricity sector. To evaluate public support for a national clean energy standard (NCES), we conducted a nationally representative survey that included randomized treatments on the sources of eligible power generation and program costs. We find that the average American is willing to pay $162 per year in higher electricity bills (95$128-$260), representing a 13$59 per year, while House passage would require costs below $48 per year. The results imply that an “80% by 2035” NCES could pass both chambers of Congress if it increases electricity rates less than 5% on average

Gerrymandering and the Limits of Representative Democracy

We assess the capacity of gerrymandering to undermine the will of the people in a representative democracy. Citizens have political positions represented on a spectrum, and electoral maps separate people into districts. We show that unrestrained gerrymandering can severely distort the composition of a legislature, potentially leading half the population to lose all representation of their views. This means that, under majority rule in the congress, gerrymandering enables politicians to enact any legislation of their choice as long as it falls within the interquartile range of the political spectrum. Just as worrisome, gerrymandering can rig any legislation to pass instead of the median policy, which would otherwise prevail in a referendum against any other choice

Does Collective Responsibility for Performance Alter Party Strategies? Policy-Seeking Parties in Proportional Systems

AbstractAdams and Merrill have developed a model of policy-seeking parties in a parliamentary democracy competing in a PR electoral system, in which party elites are uncertain about voters’ evaluations of the parties’ valence attributes such as competence, integrity and charisma. This article extends that model to situations where voters hold coalitions of parties collectively responsible for their valence-related performances, such as how voters evaluate governing parties’ competence in handling issues like the economy, crime and foreign policy crises. It may also be relevant to voters’ evaluations of proto-coalitions of opposition parties. Computations suggest the central substantive conclusions reported in Adams and Merrill extend to this generalized model, and that collective responsibility enhances coalition members’ incentives to converge to similar policy positions but depresses their prospects of achieving their policy objectives.</jats:p

Non-cooperative support for the asymmetric nash bargaining solution

Research (NWO) for financial support. Our work contributes to the game-theoretic analysis of bargaining by providing additional non-cooperative support to the well-known Nash bargaining solution. In particular, in the present paper we study a model of non-cooperative multilateral bargaining with a very general proposer selection protocol and set of feasible payoffs. In each period of the bargaining game, one out of n players is recognized as the proposer according to an irreducible Markov process. The proposer offers a particular element of the convex set of feasible payoffs. If all players accept the offer, it is implemented. If a player rejects the offer, with some probability the negotiations break down and with the remaining probability the next period starts. We show that subgame perfect equilibria in stationary strategies exist and we fully characterize the set of such equilibria. Our main result is that in the limit, as the exogenous risk of breakdown goes to zero, stationary subgame perfect equilibrium payoffs converge to the weighted Nash bargaining solution with the stationary distribution of the Markov proposer selection process as the weight vector. This result generalizes recent findings which are based on time-invariant recognition probabilities or a fixed order of proposers. The proof requires more than mere technical generalizations of those existing results

Extreme Points of First-Order Stochastic Dominance Intervals: Theory and Applications

We characterize the extreme points of first-order stochastic dominance (FOSD) intervals and show how these intervals are at the heart of many topics in economics. Using knowledge of these extreme points, we characterize the distributions of posterior quantiles under a given prior, leading to an analogue of a classical result regarding the distribution of posterior means. We apply this analogue to various economic subjects, including the psychology of judgement, political economy, and Bayesian persuasion. In addition, FOSD intervals provide a common structure to security design. We use the extreme points to unify and generalize seminal results in that literature when either adverse selection or moral hazard pertains

Dynamic Legislative Policy Making

We prove existence of stationary Markov perfect equilibria in an infinite-horizon model of legislative policy making in which the policy outcome in one period determines the status quo in the next. We allow for a multidimensional policy space and arbitrary smooth stage utilities. We prove that all such equilibria are essentially in pure strategies and that proposal strategies are differentiable almost everywhere. We establish upper hemicontinuity of the equilibrium correspondence, and we derive conditions under which each equilibrium of our model determines a unique invariant distribution characterizing long run policy outcomes. We illustrate the equilibria of the model in a numerical example of policy making in a single dimension, and we discuss extensions of our approach to accommodate much of the institutional structure observed in real-world politics.