Legislative bargaining with heterogeneous disagreement values: theory and experiments

Miller, Luis; Montero, Maria; Vanberg, Christoph

Abstract

We study a legislative bargaining game in which failure to agree in a given round may result in a breakdown of negotiations. In that case, each player receives an exogenous `disagreement value'. We characterize the set of stationary subgame perfect equilibria under all q-majority rules. Under unanimity rule, equilibrium payoffs are strictly increasing in disagreement values. Under all less-than-unanimity rules, expected payoffs are either decreasing or first increasing and then decreasing in disagreement values. We conduct experiments involving three players using majority and unanimity rule, finding qualitative support for several, but not all, of our main predictions. Having a high disagreement value is indeed an advantage under unanimity. Under majority, the player with the highest disagreement value is more likely to be excluded, but this does not consistently result in a lower average payoff.

Citation

Miller, L., Montero, M., & Vanberg, C. (2018). Legislative bargaining with heterogeneous disagreement values: theory and experiments. Games and Economic Behavior, 107, https://doi.org/10.1016/j.geb.2017.11.003

• Journal Article Type: Article
• Acceptance Date: Nov 13, 2017
• Online Publication Date: Nov 16, 2017
• Publication Date: Jan 31, 2018
• Deposit Date: Jan 3, 2018
• Publicly Available Date: May 17, 2019
• Journal: Games and Economic Behavior
• Print ISSN: 0899-8256
• Electronic ISSN: 1090-2473
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 107
• DOI: https://doi.org/10.1016/j.geb.2017.11.003
• Keywords: legislative bargaining; majority rule;; unanimity rule; risk of breakdown; experiments
• Public URL: https://nottingham-repository.worktribe.com/output/907863
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S0899825617301963?via%3Dihub
• Contract Date: Jan 3, 2018