On Dynamic Compromise

T. Renee Bowen and Zaki Zahran ()
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Zaki Zahran: Department of Economics, Georgetown University, https://sites.google.com/site/tamarareneebowenlyn/research

Working Papers from Georgetown University, Department of Economics

Abstract: What prevents majorities from extracting surplus from minorities in a dynamic legislative process? In this paper we study an infinitely repeated game where legislators determine the division of a surplus each period. A division proposal is made at the beginning of the period by a randomly selected legislator and is then voted on. Proposals that are accepted by a simple majority are implemented, otherwise the status quo allocation prevails. We show existence of a symmetric Markov perfect equilibrium in which more than a minimum winning majority receive a positive allocation for an intermediate range of discount factors. However, the equilibrium outcome is sensitive to initial conditions: compromise is achieved when initial allocations are well distributed, otherwise the equilibrium spirals towards a complete absence of compromise. We find that, contrary to intuition, compromise becomes easier to sustain as the number of legislators increases.

JEL-codes: C73 D74 (search for similar items in EconPapers)
Date: 2006-06-10
New Economics Papers: this item is included in nep-gth and nep-reg
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Related works:
Journal Article: On dynamic compromise (2012)
Working Paper: On Dynamic Compromise (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~06-06-10

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