Political Brinkmanship and Compromise

Helios Herrera, Antonin Macé and Matias Nuñez
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Helios Herrera: University of Warwick [Coventry], CEPII - Centre d'études prospectives et d'informations internationales

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Abstract: We study how do-or-die threats ending negotiations affect gridlock and welfare when two opposing parties bargain. Failure to agree on a deal in any period implies a continuation of the negotiation. However, under brinkmanship, agreement failure in any period may precipitate a crisis with a small chance. In equilibrium, such brinkmanship threats improve the probability of an agreement, but also increase the risk of crisis. Brinkmanship reduces welfare when one might think it is most needed: severe gridlock. In this case, despite this global welfare loss, a party has incentives to use brinkmanship strategically to obtain a favorable bargaining position

Keywords: Brinkmanship; Political Gridlock; Bargaining Advantage (search for similar items in EconPapers)
Date: 2025-02
New Economics Papers: this item is included in nep-cwa and nep-int
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Working Paper: Political Brinkmanship and Compromise (2025)
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