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48
A ThreePlayer Dynamic Majoritarian Bargaining Game.Journal of Economic Theory
, 2004
"... We analyze an infinitely repeated dividethedollar bargaining game with an endogenous reversion point. In each period a new dollar is divided among three legislators according to the proposal of a randomly recognized member—if a majority prefer so—or according to previous period’s allocation otherw ..."
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Cited by 55 (6 self)
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We analyze an infinitely repeated dividethedollar bargaining game with an endogenous reversion point. In each period a new dollar is divided among three legislators according to the proposal of a randomly recognized member—if a majority prefer so—or according to previous period’s allocation otherwise. Although current existence theorems for Markovian equilibria do not apply for this dynamic game, we fully characterize a Markov equilibrium. The equilibrium is such that irrespective of the discount factor or the initial division of the dollar, the proposer eventually extracts the whole dollar in all periods. We also show that proposal strategies are weakly continuous in the status quo that equilibrium expected utility is not quasiconcave, and the correspondence of voters ’ acceptance set (the set of allocations weakly preferred over the status quo) fails lower hemicontinuity.
Inefficiency in Legislative PolicyMaking: A Dynamic Analysis
, 2005
"... This paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining. The policy space incorporates both productive and distributive public spending and distortionary taxation. The productive spending is investing in a publi ..."
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Cited by 44 (13 self)
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This paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining. The policy space incorporates both productive and distributive public spending and distortionary taxation. The productive spending is investing in a public good that benefits all citizens (e.g., national defense or air quality) and the distributive spending is districtspecific transfers (e.g., pork barrel spending). Investment in the public good creates a dynamic linkage across policymaking periods. The analysis explores the dynamics of legislative policy choices, focusing on the efficiency of the steady state level of taxation and allocation of tax revenues. The model sheds new light on the efficiency of legislative policymaking and has a number of novel positive implications.
Whither Political Economy? Theories, Facts and Issues
 In Advances in Economics and Econometrics: Theory and Applications, Ninth World Congress, Volume 1 (Econometric Society Monographs
, 2006
"... In this paper, I discuss recent developments in political economy. By focusing on the microeconomic side of the discipline, I present an overview of current research on four of the fundamental institutions of a political economy: voters, politicians, parties and governments. For each of these topics ..."
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Cited by 44 (13 self)
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In this paper, I discuss recent developments in political economy. By focusing on the microeconomic side of the discipline, I present an overview of current research on four of the fundamental institutions of a political economy: voters, politicians, parties and governments. For each of these topics, I identify and discuss some of the salient questions that have been posed and addressed in the literature, present some stylized models and examples, and summarize the main theoretical findings. Furthermore, I describe the available data, review the relevant empirical evidence, and discuss some of the challenges for empirical research in political economy.
Majority rule in a stochastic model of bargaining
 Journal of Economic Theory
, 2002
"... ∗We thank two anonymous referees for their useful suggestions. Ed Green, George Mailath, Andy McLennan and seminar and conference participants at several institutions provided useful comments. Merlo acknowledges the financial support of the National Science Foundation and the C.V. Starr Center for A ..."
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Cited by 32 (4 self)
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∗We thank two anonymous referees for their useful suggestions. Ed Green, George Mailath, Andy McLennan and seminar and conference participants at several institutions provided useful comments. Merlo acknowledges the financial support of the National Science Foundation and the C.V. Starr Center for Applied Economics at New York University. Majority Rule 1 Abstract: In this paper we consider multilateral stochastic bargaining models with general agreement rules. For nplayer games where in each period a player is randomly selected to allocate a stochastic level of surplus and q ≤ n players have to agree on a proposal to induce its acceptance, we characterize the set of stationary subgame perfect equilibrium payoffs and establish their existence. We show that for agreement rules other than the unanimity rule, the equilibrium payoffs need not be unique. Furthermore, even when the equilibrium is unique, it need not be efficient. Journal
LEGISLATIVE BARGAINING UNDER WEIGHTED VOTING
, 2001
"... Voting institutions commonly assign different weights across voters. Most analyses of such systems assume that the relative influence of each player is nonlinear in her voting weight. We reassess this assumption with a distributive bargaining game that closely resembles the closedrule, infiniteho ..."
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Cited by 22 (1 self)
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Voting institutions commonly assign different weights across voters. Most analyses of such systems assume that the relative influence of each player is nonlinear in her voting weight. We reassess this assumption with a distributive bargaining game that closely resembles the closedrule, infinitehorizon BaronFerejohn (1989) model. In equilibrium, voters with lower weights are typically perfect substitutes for voters with higher weights. Hence, each voter's power is exactly proportional to her voting weight. An exception occurs when su±cient numbers of highweight voters exist. In this case, lowweight voters are relatively more powerful than highweight voters because their probabilities of being recognized to make a proposal are equal to those of highweight voters. These results call into question the applicability of power indices such as the Banzhaf index and ShapleyShubik value, which are often convex in voting weights
Majority Rule Dynamics with Endogenous Status Quo
, 2007
"... We analyze a stochastic bargaining game in which a new dollar is divided among committee members in each of an infinity of periods. In each period, a committee member is recognized and offers a proposal for the division of the dollar. The proposal is implemented if it is approved by a majority. If t ..."
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Cited by 16 (1 self)
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We analyze a stochastic bargaining game in which a new dollar is divided among committee members in each of an infinity of periods. In each period, a committee member is recognized and offers a proposal for the division of the dollar. The proposal is implemented if it is approved by a majority. If the proposal is rejected, then last period’s allocation is implemented. We show existence of equilibrium in Markovian strategies. It is such that irrespective of the initial status quo, the discount factor, or the probabilities of recognition, the proposer extracts the entire dollar in all periods but the initial two. We also derive a fully strategic version of McKelvey’s (1976), (1979) dictatorial agenda setting, so that a player with exclusive access to the formulation of proposals can extract the entire dollar in all periods except the first. The equilibrium collapses when within period payoffs are sufficiently concave. Winning coalitions may comprise players with high instead of low recognition probabilities, ceteris paribus.
2007), “Generalized PoincareHopf Theorem for Compact Nonsmooth Regions
 Mathematics of Operations Research
"... This paper presents an extension of the PoincaréHopf Theorem to generalized critical points of a function on a compact region with nonsmooth boundary, M, defined by a finite number of smooth inequality constraints. Given a function F: M ↦ → Rn, we define the generalized critical points of F over M, ..."
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Cited by 12 (3 self)
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This paper presents an extension of the PoincaréHopf Theorem to generalized critical points of a function on a compact region with nonsmooth boundary, M, defined by a finite number of smooth inequality constraints. Given a function F: M ↦ → Rn, we define the generalized critical points of F over M, define the index for the critical point, and show that the sum of the indices of the critical points is equal to the Euler characteristic of M. We use the generalized PoincaréHopf Theorem to present sufficient (local) conditions for the uniqueness of solutions to finitedimensional variational inequalities and the uniqueness of stationary points in nonconvex optimization problems for the region M. 1
Dynamic Legislative Policy Making
, 2007
"... We prove existence of stationary Markov perfect equilibria in an infinitehorizon 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 s ..."
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Cited by 10 (1 self)
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We prove existence of stationary Markov perfect equilibria in an infinitehorizon 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 realworld politics.
Structure and Power in Multilateral Negotiations: An Application to French Water Policy
, 2006
"... Stakeholder negotiation is an increasingly important policymaking tool. However, relatively little is understood about the relationship between the structure of the negotiating process and the effectiveness with which participating stakeholders can pursue their individual interests. In this paper, w ..."
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Cited by 8 (1 self)
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Stakeholder negotiation is an increasingly important policymaking tool. However, relatively little is understood about the relationship between the structure of the negotiating process and the effectiveness with which participating stakeholders can pursue their individual interests. In this paper, we apply the RausserSimon multilateral bargaining model to a specific negotiation process, involving water storage capacity and use in the upper part of the Adour Basin in southwestern France. In the RausserSimon model, the elements of negotiation structure include: the list of participants at the bargaining table; the set of issues being negotiated; the decision rule; political weights (“access”); and the nature of the outcome if agreement cannot be reached. The richness of the data and institutional information available to us provides a realistic environment in which to examine the effect of negotiation structure on participant power. We focus in particular on
2006b), “Regularity of Pure Strategy Equilibrium Points in a Class of Bargaining Games,” Economic Theory
"... Summary. We develop an index theory for the Stationary Subgame Perfect (SSP) equilibrium set in a class of nplayer (n ≥ 2) sequential bargaining games with probabilistic recognition rules. For games with oligarchic voting rules (a class that includes unanimity rule), we establish conditions on indi ..."
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Cited by 8 (0 self)
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Summary. We develop an index theory for the Stationary Subgame Perfect (SSP) equilibrium set in a class of nplayer (n ≥ 2) sequential bargaining games with probabilistic recognition rules. For games with oligarchic voting rules (a class that includes unanimity rule), we establish conditions on individual utilities that ensure that for almost all discount factors, the number of SSP equilibria is odd and the equilibrium correspondence lowerhemicontinuous. For games with general, monotonic voting rules, we show generic (in discount factors) determinacy of SSP equilibria under the restriction that the agreement space is of dimension one. For nonoligarchic voting rules and agreement spaces of higher finite dimension, we establish generic determinacy for the subset of SSP equilibria in pure strategies. The analysis also extends to the case of fixed delay costs. Lastly, we provide a sufficient condition for uniqueness of SSP equilibrium in oligarchic games.