Formal versus informal legislative bargaining
Title: Formal versus informal legislative bargaining
Citation: Games and economic behavior, 2016, Vol. 96, pp. 1-17
We study how the formality of a bargaining procedure affects its outcome. We compare a formal Baron–Ferejohn bargaining procedure to an informal procedure where players make and accept proposals in continuous time. Both constitute non-cooperative games corresponding to the same bargaining problem: a three-player median voter setting with an external disagreement point. This allows us to study formality in the presence and absence of a core and provides a natural explanation for the effects of preference polarization. Our results show that polarization hurts the median player and that formality matters. The median player is significantly better off under informal bargaining.
First published online: 25 January 2016
Type of Access: embargoedAccess
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