Coalition Preclusion Contracts and Moderate Policies

We examine the effects of a novel political institution called Coalition Preclusion Contracts (CPCs) on the functioning of democracies with proportional representation. CPCs enable political parties to credibly exclude one or several parties from the range of coalitions they are prepared to envisage after elections. We consider a simple political game with a two-dimensional policy space in which three parties compete to form the government. We find that CPCs with a one-party exclusion rule defend the interests of the majority by precluding coalition governments that would include so-called extreme parties. This translates into moderation of the policies implemented and yields welfare gains for a large set of parameter values. We discuss the robustness of the results in more general settings and study how party-exclusion rules have to be adjusted when more than three parties compete in an election.

[1]  K. Chatterjee,et al.  Coalition Theory and its Applications: A Survey , 2006 .

[2]  Mehmet Ekmekci.  Manipulation through political endorsements , 2009, J. Econ. Theory.

[3]  D. Austen-Smith.  Sincere voting in models of legislative elections , 1989 .

[4]  Dennis C. Mueller,et al.  Public choice: An introduction , 1988 .

[5]  Lars P. Feld,et al.  Do large cabinets favor large governments? Evidence on the fiscal commons problem for Swiss Cantons , 2009 .

[6]  H. Gersbach.  Contractual Democracy , 2008 .

[7]  Maik T. Schneider,et al.  Tax Contracts and Elections , 2009 .

[8]  Debraj Ray.  A Game-Theoretic Perspective on Coalition Formation , 2007 .

[9]  J. Banks,et al.  Elections, Coalitions, and Legislative Outcomes , 1988, American Political Science Review.

[10]  Sona N. Golder.  Pre-Electoral Coalition Formation in Parliamentary Democracies , 2006, British Journal of Political Science.

[11]  Michael F. Meffert,et al.  Coalition Signals as Cues for Party and Coalition Preferences , 2010 .

[12]  L. A. Goodman,et al.  Social Choice and Individual Values , 1951 .

[13]  Julian Aichholzer,et al.  On the nature of voters’ coalition preferences , 2016, Journal of elections, public opinion and parties.

[14]  I. Indridason,et al.  Uncertainty, Complexity, and Gamson’s Law: Comparing Coalition Formation in Western Europe , 2013 .

[15]  Roberto Serrano.  Non-cooperative implementation of the nucleolus: The 3-player case , 1993 .

[16]  R. Selten.  A Noncooperative Model of Characteristic-Function Bargaining , 1988 .

[17]  Gary E. Bolton,et al.  How Communication Links Influence Coalition Bargaining: A Laboratory Investigation , 2003, Manag. Sci..

[18]  David Wettstein,et al.  Bidding for the Surplus : A Non-cooperative Approach to the Shapley Value , 2001, J. Econ. Theory.

[19]  C. Carraro.  The Endogenous Formation of Economic Coalitions , 2003 .

[20]  A. Belchior.  Explaining Left–Right Party Congruence Across European Party Systems , 2013 .

[21]  Pre-Election Polls as Strategic Coordination Devices , 2012 .

[22]  A. Rubinstein.  Perfect Equilibrium in a Bargaining Model , 1982 .

[23]  D. Mueller.  Public Choice III: What have we learned? , 1979 .

[24]  Antonio Merlo,et al.  Do Voters Vote Sincerely? Second Version , 2007 .

[25]  William A. Gamson,et al.  A theory of coalition formation , 1961 .

[26]  M. Debus.  Pre-electoral commitments and government formation , 2008 .

[27]  Debraj Ray,et al.  A noncooperative theory of coalitional bargaining , 1993 .

[28]  Orit Kedar.  How voters work around institutions: Policy balancing in staggered elections , 2006 .

[29]  David A. Armstrong,et al.  A Strategic Ideological Vote , 2008 .

[30]  J. Ferejohn,et al.  Bargaining in Legislatures , 1989, American Political Science Review.

[31]  J. Rosenmüller.  The theory of games and markets , 1981 .

[32]  André Blais,et al.  Do Voters Vote For Government Coalitions? , 2006 .

[33]  Andrew Postlewaite,et al.  Political reputations and campaign promises , 2007 .