Gridlock, leverage, and policy bundling

We consider a dynamic model of bargaining where alternatives to the status-quo arrive stochastically during the bargaining process, the proposer can bundle multiple alternatives into a single proposal, and a forward-looking voter elects the agendasetter. We show that the prevailing wisdom that policy bundling reduces gridlock — by facilitating compromise across different policy areas — is incomplete. Policy bundling can also increase gridlock: a player may veto or delay a bipartisan alternative, which is unanimously preferred to the status-quo, so that in the future they can bundle this same alternative with a divisive alternative that otherwise would not pass. Gridlock of this form is more likely to occur during periods of economic stability and suggests that traditional measures of legislator ideology will overstate polarization. From the voter’s perspective, we show that gridlock occurs at an inefficiently high frequency. This state of “excess gridlock” is driven by the voter being forward-looking and lacking commitment power to punish players that veto.