Dynamic Collective Choice with Endogenous Status Quo

Wioletta Dziuda and Antoine Loeper

Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: This paper analyzes an ongoing bargaining situation in which i) preferences evolve overtime, ii) the interests of individuals are not perfectly aligned, and iii) the previous agreement becomes the next status quo and determines the payoffs until a new agreement is reached. We show that the endogeneity of the status quo exacerbates the players’ conflict of interest and decreases the responsiveness of the bargaining outcome to the environment. Players with arbitrarily similar preferences can behave as if their interests were highly discordant. When players become very patient, the endogeneity of the status quo can bring the negotiations to a complete gridlock. Under mild regularity conditions, fixing the status quo throughout the game via an automatic sunset provision improves welfare. The detrimental effect of the endogeneity of the status quo can also be mitigated by concentrating decision rights, for instance, by lowering the supermajority requirement.

Keywords: Dynamic voting; endogenous status quo; supermajority; partisanship; polarization; policy inertia; sunset provision JEL Classification Numbers: C73; D72; D78 (search for similar items in EconPapers)
Date: 2010-10-26
New Economics Papers: this item is included in nep-cdm, nep-dcm and nep-gth
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Citations: View citations in EconPapers (31)

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Journal Article: Dynamic Collective Choice with Endogenous Status Quo (2016)
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