A General Bargaining Model of Legislative Policy-making

We present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space. In contrast to other bargaining models, the status quo is not assumed to be bad for all legislators, and delay may be Pareto efficient. We prove existence of stationary equilibria. We show that if all legislators are risk averse or if even limited transfers are possible, then delay is only possible if the status quo lies in the core. Thus, we expect immediate agreement in multidimensional models, where the core is typically empty. In one dimension, delay is possible if and only if the status quo lies in the core of the voting rule, and then it is the only possible outcome. Our comparative statics analysis yield two noteworthy insights: moderate status quos imply moderate policy outcomes, and legislative patience implies policy moderation. A central objective of research in political economy is to obtain a general understanding of the determinants of public policy in a majoritarian society. Black’s (1958) median voter theorem provides compelling predictions when policies are restricted to a single dimension, but the theory of social choice has yielded quite negative results ∗ This paper was completed after Jeff Banks’s death. I am deeply indebted to him for his friendship and his collaboration on this and many other projects. † Support from the National Science Foundation, grant numbers SES-9975173 and SES-0213738, is gratefully acknowledged. MS submitted 16 March 2005; final version received 14 June 2005 ISSN 1554-0626; DOI 10.1561/100.00000001 © 2006 now Publishers.