Working Paper: CEPR ID: DP2207
Authors: Mika Widgrn
Abstract: In this paper we combine a non-cooperative decision-making game in a federal structure with two levels of interest and an incomplete contract which sets the rules of the game. The question we pose is how to combine ex ante efficiency of the design with ex post efficiency of the outcomes in the decision-making game. The paper shows that in common policies there are no designs that lead to both types of efficiency but flexible integration is a way to achieve both.
Keywords: incomplete contracts; integration; legislative bargaining; non cooperative games
JEL Codes: C72; D71; D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decision-making rules (D70) | efficiency outcomes (D61) |
| flexible integration (F15) | balance between ex ante and ex post efficiency (D61) |
| majority rule from [1/2, 3/4] (D79) | ex ante optimality and ex post efficiency (D61) |