Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/59674
Authors: 
Dziuda, Wioletta
Loeper, Antoine
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1514
Abstract: 
This paper analyzes an ongoing bargaining situation in which preferences evolve over time and the previous agreement becomes the next status quo, determining 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. In some cases, it can lead the negotiations to complete gridlock. Compared to a bargaining protocol with an exogenous status quo, the status quo stays in place more often and equilibrium welfare is lower. In a legislative setting, this model shows that the inertial effect of the endogenous status quo can be mitigated by concentrating decision power, and can be eliminated by sunset provisions.
Subjects: 
dynamic voting
endogenous status quo
partisanship
polarization
policy inertia
sunset provision
checks and balances
JEL: 
C73
D72
D78
Document Type: 
Working Paper

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