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Coalition Formation in Legislative Bargaining

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  • Battaglini, Marco
Abstract
We propose a new model of legislative bargaining in which coalitions may have different values, reflecting the fact that the policies they can pursue are constrained by the identity of the coalition members. In the model, a formateur picks a coalition and negotiates for the allocation of the surplus it is expected to generate. The formateur is free to change coalitions to seek better deals with other coalitions, but she may lose her status if bargaining breaks down, in which case a new formateur is chosen. We show that as the delay between offers goes to zero, the equilibrium allocation converges to a generalized version of a Nash Bargaining Solution in which --in contrast to the standard solution-- the coalition is endogenous and determined by the relative coalitional values. A form of the hold-up problem specific to these bargaining games contributes to generate significant inefficiencies in the selection of the equilibrium coalition. We show that the model helps rationalize well known empirical facts that are in conflict with the predictions of standard non-cooperative models of bargaining: the absence of significant (or even positive) premia in ministerial allocations for formateurs and their parties; the occurrence of supermajorities; and delays in reaching agreements.

Suggested Citation

  • Battaglini, Marco, 2019. "Coalition Formation in Legislative Bargaining," CEPR Discussion Papers 13581, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13581
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    Cited by:

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    2. Michael J. Boskin & Diego J. Perez & Daniel S. Bennett, 2019. "The Political Economy of Social Security Reform," NBER Working Papers 25985, National Bureau of Economic Research, Inc.
    3. Gomes, Armando, 2022. "Coalitional bargaining games: A new concept of value and coalition formation," Games and Economic Behavior, Elsevier, vol. 132(C), pages 463-477.
    4. Evdokimov, Kirill S., 2023. "Equality in legislative bargaining," Journal of Economic Theory, Elsevier, vol. 212(C).
    5. Franziska Heinicke & Wladislaw Mill & Henrik Orzen, 2024. "Bargaining Under the Threat of a Nuclear Option," CRC TR 224 Discussion Paper Series crctr224_2024_559, University of Bonn and University of Mannheim, Germany.
    6. Guido Merzoni & Federico Trombetta, 2022. "The Political Economy of Technocratic Governments," DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo dis2204, Università Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS).

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    More about this item

    Keywords

    Legislative bargaining; Hold up; Head of state;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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