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Veto players and equilibrium uniqueness in the Baron-Ferejohn model

Celik, L. ORCID: 0000-0002-7668-6358 and Karabay, B. (2016). Veto players and equilibrium uniqueness in the Baron-Ferejohn model. Theory and Decision, 81(1), pp. 33-52. doi: 10.1007/s11238-015-9520-1

Abstract

In political economy, the seminal contribution of the Baron–Ferejohn bargaining model constitutes an important milestone for the study of legislative policy making. In this paper, we analyze a particular equilibrium characteristic of this model, equilibrium uniqueness. The Baron–Ferejohn model yields a class of payoff-unique stationary subgame perfect equilibria (SSPE) in which players’ equilibrium strategies are not uniquely determined. We first provide a formal proof of the multiplicity of equilibrium strategies. This also enables us to establish some important properties of SSPE. We then introduce veto players into the original Baron–Ferejohn model. We state the conditions under which the new model has a unique SSPE not only in terms of payoffs but also in terms of players’ equilibrium strategies.

Publication Type: Article
Additional Information: This is a post-peer-review, pre-copyedit version of an article published in Theory and Decision. The final authenticated version is available online at: https://doi.org/10.1007/s11238-015-9520-1
Publisher Keywords: Multilateral bargaining; equilibrium uniqueness; veto players
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Arts & Social Sciences > Economics
URI: https://openaccess.city.ac.uk/id/eprint/23490
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