Dynamic Legislative Bargaining with Veto Power: Theory and Experiments

Salvatore Nunnari

No 12938, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In many domains, committees bargain over a sequence of policies and a policy remains in effect until a new agreement is reached. In this paper, I argue that, in order to assess the consequences of veto power, it is important to take into account this dynamic aspect. I analyze an infinitely repeated divide-the-dollar game with an endogenous status quo policy. I show that, irrespective of legislators' patience and the initial division of resources, policy eventually gets arbitrarily close to full appropriation by the veto player; that increasing legislators' patience or decreasing the veto player's ability to set the agenda makes convergence to this outcome slower; and that the veto player supports reforms that decrease his allocation. These results stand in sharp contrast to the properties of models where committees bargain over a single policy. The main predictions of the theory find support in controlled laboratory experiments.

Keywords: Dynamic legislative bargaining; Endogenous status quo; Veto power; Markov perfect equilibrium; Laboratory experiments (search for similar items in EconPapers)
JEL-codes: C72 C73 C78 D71 D72 D78 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Dynamic legislative bargaining with veto power: Theory and experiments (2021)
Working Paper: Dynamic Legislative Bargaining with Veto Power: Theory and Experiments (2019)
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