The Role of the Status-Quo in Dynamic Bargaining
We analyze a dynamic bargaining game where parties can agree to implement a policy change, which is costly (beneficial) in the short-run but beneficial (costly) in the long-run. When the status-quo is endogenized (at least in some components), we show that the more farsighted party can induce their...
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-04-01
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| Series: | Games |
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| Online Access: | https://www.mdpi.com/2073-4336/14/3/35 |
| Summary: | We analyze a dynamic bargaining game where parties can agree to implement a policy change, which is costly (beneficial) in the short-run but beneficial (costly) in the long-run. When the status-quo is endogenized (at least in some components), we show that the more farsighted party can induce their rival to accept the short-run costs of policy changes designed to generate benefits in the long-run. This is more common when players’ asymmetries are less pronounced, the status-quo is fully endogenized and the state depreciates more quickly. |
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| ISSN: | 2073-4336 |