Legislative Hostage-Taking

29 Pages Posted: 29 Oct 2022

See all articles by Giovanni Andreottola

Giovanni Andreottola

Vienna University of Economics and Business

Barton E. Lee

ETH Zürich

Date Written: October 27, 2022


Legislative hostage-taking–whereby the minority party refuses to pass a bipartisan policy unless another divisive or contentious policy also passes–has become a frequent occurrence in Washington. We develop a dynamic, two-period model of legislative bargaining and electoral politics to provide insights into why hostage-taking occurs, which policies are held hostage, and which policies are demanded as ransom. A key insight is that (credible) hostage-taking can only occur if the divisive policy benefits the voter and that, when it occurs, it is always welfare-improving for the voter. In fact, the voter would benefit if hostage-taking occurred more often than it does in equilibrium. We also show that hostage-taking has the potential to generate perverse policy distortions (``money burning''), which may reduce the voter's welfare.

Keywords: Gridlock, Bargaining, Hostage-taking, Policymaking

JEL Classification: D72, D78

Suggested Citation

Andreottola, Giovanni and Lee, Barton E., Legislative Hostage-Taking (October 27, 2022). Available at SSRN: https://ssrn.com/abstract=4259735 or http://dx.doi.org/10.2139/ssrn.4259735

Giovanni Andreottola

Vienna University of Economics and Business

Barton E. Lee (Contact Author)

ETH Zürich ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015

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