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Rank Effects in Bargaining: Evidence from Government Formation

Rank Effects in Bargaining: Evidence from Government Formation Abstract Theories of multilateral bargaining and coalition formation applied to legislatures predict that parties' seat shares determine their bargaining power. We present findings that are difficult to reconcile with this prediction, but consistent with a norm prescribing that “the most voted party should form the government.” We first present case studies from several countries and regression discontinuity design-based evidence from 28 national European parliaments. We then focus on 2,898 Spanish municipal elections in which two parties tie in the number of seats. We find that the party with slightly more general election votes is substantially more likely to appoint the mayor. Since tied parties should (on average) have equal bargaining power, this identifies the effect of being labeled the most voted. This effect is comparable to that of obtaining an additional seat, and is also present when a right-wing party is the most voted and the second and third most voted parties are allied left-wing parties who can form a combined majority. A model where elections both aggregate information and discipline incumbents can rationalize our results and yields additional predictions we take to the data, such as voters punishing second most voted parties that appoint mayors. This content is only available as a PDF. © The Author(s) 2019. Published by Oxford University Press on behalf of The Review of Economic Studies Limited. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

Rank Effects in Bargaining: Evidence from Government Formation

Fujiwara,, Thomas; Sanz,, Carlos
The Review of Economic Studies , Volume Advance Article – Jan 29, 2018
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References (62)

Publisher
Oxford University Press
Copyright
© The Author(s) 2019. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.
ISSN
0034-6527
eISSN
1467-937X
DOI
10.1093/restud/rdz004
Publisher site
See Article on Publisher Site

Abstract

Abstract Theories of multilateral bargaining and coalition formation applied to legislatures predict that parties' seat shares determine their bargaining power. We present findings that are difficult to reconcile with this prediction, but consistent with a norm prescribing that “the most voted party should form the government.” We first present case studies from several countries and regression discontinuity design-based evidence from 28 national European parliaments. We then focus on 2,898 Spanish municipal elections in which two parties tie in the number of seats. We find that the party with slightly more general election votes is substantially more likely to appoint the mayor. Since tied parties should (on average) have equal bargaining power, this identifies the effect of being labeled the most voted. This effect is comparable to that of obtaining an additional seat, and is also present when a right-wing party is the most voted and the second and third most voted parties are allied left-wing parties who can form a combined majority. A model where elections both aggregate information and discipline incumbents can rationalize our results and yields additional predictions we take to the data, such as voters punishing second most voted parties that appoint mayors. This content is only available as a PDF. © The Author(s) 2019. Published by Oxford University Press on behalf of The Review of Economic Studies Limited. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model)

Journal

The Review of Economic Studies – Oxford University Press

Published: Jan 29, 2018

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