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Political Brinkmanship and Compromise

Author

Listed:
  • Helios Herrera

    (University of Warwick [Coventry], CEPII - Centre d'études prospectives et d'informations internationales)

  • Antonin Macé

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Matias Nùnez

    (CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz], IP Paris - Institut Polytechnique de Paris, GENES - Groupe des Écoles Nationales d'Économie et Statistique)

Abstract
We study how do-or-die threats ending negotiations affect gridlock and welfare when two opposing parties bargain. Failure to agree on a deal in any period implies a status-quo disagreement payoff and a continuation of the negotiation. However, under brinkmanship, agreement failure in any period may precipitate a crisis with a small chance, i.e. an outcome worse than the status-quo and any possible deal. In equilibrium, such brinkmanship threats improve gridlock, i.e. the scope of agreement, but also increase the risk of crisis. Brinkmanship reduces welfare when one might think it is most needed: severe gridlock. In this case, despite this global welfare loss, a party has incentives to use brinkmanship strategically to obtain a favorable bargaining position.

Suggested Citation

  • Helios Herrera & Antonin Macé & Matias Nùnez, 2023. "Political Brinkmanship and Compromise," PSE Working Papers halshs-03225030, HAL.
    • Handle: RePEc:hal:psewpa:halshs-03225030
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03225030v2
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    References listed on IDEAS

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    Keywords

    Brinkmanship; Political Gridlock; Bargaining Advantage;
    All these keywords.

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