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Policy Reform

Avidit Acharya () and Juan Ortner

No WP2017-007, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: We construct a model of policy reform in which two players continually search for Pareto improving policies. The players have imperfect control over the proposals that are considered. Ineffcient gridlock takes place due to the difficulty in finding moderate policies. The reform process is path dependent, with early agreements determining long-run outcomes. The process may also be cyclical, as players alternate between being more and less accommodating. Our model provides a noncooperative foundation for the "Raiffa path", by which bargainers gradually approach the Pareto frontier.

Keywords: collective search; bargaining; path dependence; cycling; endogenous status quo; Raiffa path; gridlock; delay; inefficiency. (search for similar items in EconPapers)
Pages: 31 pages
Date: 2017-02
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http://www.bu.edu/econ/files/2017/04/Ortner-Policy.pdf

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