A Bargaining Model of Endogenous Procedures

Abstract

This paper endogenizes policymaking procedures in a multilateral bargaining framework. A procedure specifies players' proposal power in bargaining over one-dimensional policies. In procedural bargaining players internalize the procedures' effects on subsequent policy bargaining. In policy bargaining players' utilities are strictly concave and order-restricted. The paper provides equilibrium characterization, existence, and uniqueness results for this two-tier bargaining model. Although the procedural choice set is multidimensional, sequentially rational procedures feature "limited power sharing" and admit a total order. In equilibrium endogenous policy and procedure are strategic complements.

Keywords: endogenous procedures, procedural bargaining, order-restricted preferences

JEL Classification: D72, D78, C72