Bargaining Foundations of the Median Voter Theorem

John Duggan and Cho, Seok-ju ()
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Cho, Seok-ju: Dept. of Political Science, Yale University, http://www.yale.edu/polisci/people/scho.html

No WP49, Wallis Working Papers from University of Rochester - Wallis Institute of Political Economy

Abstract: We provide game-theoretic foundations for the median voter theorem in a one-dimensional bargaining model based on Baron and Ferejohn’s (1989) model of distributive politics. We prove that, as the agents become arbitrarily patient, the set of proposals that can be passed in any subgame perfect equilibrium collapses to the median voter’s ideal point. While we leave the possibility of some delay, we prove that the agents’ equilibrium continuation payoffs converge to the utility from the median, so that delay, if it occurs, is inconsequential. We do not impose stationarity or any other refinements. Our result counters intuition based on the folk theorem for repeated games, and it contrasts with the known result for the distributive bargaining model that, as agents become patient, any division of the dollar can be supported as a subgame perfect equilibrium outcome.

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Date: Written
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