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Dynamic Collective Choice with Endogenous Status Quo

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  • Wioletta Dziuda
  • Antoine Loeper

Abstract

This paper analyzes an ongoing bargaining situation in which i) preferences evolve overtime, ii) the interests of individuals are not perfectly aligned, and iii) the previous agreement becomes the next status quo and determines the payoffs until a new agreement is reached. We show that the endogeneity of the status quo exacerbates the players’ conflict of interest and decreases the responsiveness of the bargaining outcome to the environment. Players with arbitrarily similar preferences can behave as if their interests were highly discordant. When players become very patient, the endogeneity of the status quo can bring the negotiations to a complete gridlock. Under mild regularity conditions, fixing the status quo throughout the game via an automatic sunset provision improves welfare. The detrimental effect of the endogeneity of the status quo can also be mitigated by concentrating decision rights, for instance, by lowering the supermajority requirement.

Suggested Citation

  • Wioletta Dziuda & Antoine Loeper, 2010. "Dynamic Collective Choice with Endogenous Status Quo," Discussion Papers 1514, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1514
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    References listed on IDEAS

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    Keywords

    Dynamic voting; endogenous status quo; supermajority; partisanship; polarization; policy inertia; sunset provision JEL Classification Numbers: C73; D72; D78;
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