Working Paper: CEPR ID: DP15406
Authors: T. Renee Bowen; Stefan Krasa; Ilwoo Hwang
Abstract: We study a dynamic bargaining model between a fixed agenda-setter and responder over successive issues. If the responder rejects the setter’s proposal, the setter can attempt to assert her will to implement her ideal and will succeed with a probability that depends on her “personal power”. The players learn about the setter’s power as gridlock persists. Gridlock occurs when the setter’s perceived power is either too high or too low, and the players reach compromise in an intermediate interval of beliefs. The presence of “difficult” issues can induce more compromise as the players have incentives to avoid learning.
Keywords: bargaining; power; gridlock; learning
JEL Codes: C78; D72; D74; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| agenda setter's perceived power (D72) | likelihood of reaching a compromise (D74) |
| high perceived power (D70) | gridlock (L91) |
| low perceived power (D72) | refusal to accept offers (C78) |
| gridlock (L91) | learning about agenda setter's power (D72) |
| difficult issues (O17) | more compromise (D74) |
| difficult issues (O17) | avoidance of learning about agenda setter's power (D72) |