Veto Players and Policy Entrepreneurship

Alexander V. Hirsch and Kenneth W. Shotts
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Alexander V. Hirsch: CA Institute of Technology
Kenneth W. Shotts: Stanford University

Research Papers from Stanford University, Graduate School of Business

Abstract: Political institutions often use decision making procedures that create veto players--individuals or groups who, despite lacking direct decision making authority, nevertheless have the power to block policy change. In this paper we use the competitive policy development model of Hirsch and Shotts (2015) to examine how the presence of veto players effects outcomes when policies are developed endogenously. Consistent with spatial models of pivotal politics, veto players can induce gridlock, which is harmful to a centrist decisionmaker. But they can also have more subtle effects. Some of the effects are negative--for example, when the status quo is centrist, veto players dampen productive policy competition because of their resistance to change. But some of the effects are surprisingly positive. In particular, when the status quo benefits a veto player and there is a skilled policy entrepreneur who is highly motivated change it, the veto player forces the entrepreneur to develop a much higher quality proposal. This effect yields substantial benefits for a centrist decisionmaker. We also show that veto players can induce asymmetric patterns of policy development, with much greater activity by the faction that is more dissatisfied with the status quo.

Date: 2015-10
New Economics Papers: this item is included in nep-cdm and nep-pol
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