Negative Voters? Electoral Competition with Loss-Aversion

This paper studies the effect of voter loss aversion in preferences over both candidate policy platforms and candidate valence on electoral competition. Loss-aversion over platforms leads to both platform rigidity and reduced platform polarisation, whereas loss-aversion over valence results in increased polarisation and the possibility of asymmetric equilibria with a self-fulfilling (dis)-advantage for the incumbent. The results are robust to a stochastic link between platforms and outcomes; they hold approximately for a small amount of noise. A testable implication of loss-aversion over platforms is that incumbents adjust less than challengers to shifts in voter preferences. We find some empirical support for this using data for elections to the US House of Representatives.

A GAME-THEORETIC APPROACH TO THE CHOICE OF UNION-OLIGOPOLY BARGAINING AGENDA

<p align="center"><strong>ABSTRACT</strong><strong></strong></p><p>This paper investigates the selection of the bargaining agenda in a unionized industry with decentralized negotiations for different competition modes. The firms choose the agenda (right-to-manage, RTM, <em>versus</em> efficient bargaining, EB), considering alternative timing of the bargaining game in the case of mixed duopoly. In fact, the EB (RTM) firm can be either Stackelberg wage follower (leader) or Stackelberg output leader (follower). A two-stage game is developed in which the typology as well as the timing of the negotiations is endogenous. It is shown that, in pure strategies, no equilibria arise for a wide set of the parameters’ space while RTM appears as the unique equilibrium agenda for a different combination of the parameters; moreover, multiple, asymmetric equilibria emerge in a limited area of the parameters’ space. These results are in sharp contrast to the received literature in which EB can arise as an industry bargaining institution in equilibrium.</p><p align="center"> </p><p align="center">UN ENFOQUE DE TEORÍA DE JUEGOS PARA LA SELECCIÓN DE LA AGENDA DE NEGOCIACIÓN DEL OLIGOPOLIO SINDICAL</p><p align="center"><strong> </strong><strong>RESUMEN</strong></p>Este artículo investiga la selección de la agenda de negociación en una industria sindicalizada con negociaciones descentralizadas para diferentes modos de competencia. Las empresas eligen la agenda (negociación con derecho de administrar, NDA, frente a negociación eficiente, NE) considerando casos alternativos de la sucesión de eventos en el juego de negociación con duopolio mixto. De hecho, la empresa NE (NDA) puede ser seguidora de salarios Stackelberg (líder) o líder de cantidades Stackelberg (seguidora). Se desarrolla un juego de dos etapas en el que la tipología y el momento de las negociaciones son endógenos. Se muestra que en estrategias puras no surgen equilibrios para un amplio conjunto del espacio de los parámetros, mientras que NDA aparece como la agenda de equilibrio única para una combinación diferente de los parámetros; además, los equilibrios múltiples y asimétricos emergen en un área limitada del espacio de los parámetros. Estos resultados contrastan con la literatura existente, en la que NE puede surgir como una institución de negociación de la industria en equilibrio.

On the Strategic Choice of Union-Oligopoly Bargaining Agenda: Further Results

This paper revisits the strategic selection of the bargaining agenda in a unionized industry with potential entry and decentralized negotiations for different competition modes. The incumbent chooses Right-to-Manage (RTM) or Efficient Bargaining (EB) considering two scenarios: (1) the agenda is imposed to the (potential) entrant (committed bargaining) and (2) the entrant can flexibly choose the agenda (flexible bargaining). In the mixed duopoly, the timing of the game is as follows: at stage 1, the EB firm bargains over wage and employment with its union, while the RTM firm bargains over the wage; at stage 2, the RTM firm chooses employment. This paper shows that the strategic selection of the agenda strongly depends on the interaction between the degree of market competition, the union’s power, and the convergence or divergence between parties on the agenda’s choice. This complex interaction leads to a very rich set of equilibrium outcomes, including multiple and even (as regards the union’s preferences on the agenda) asymmetric equilibria. Compared with alternative timings in the literature, this specification leads to substantial differences with flexible bargaining: EB emerges as equilibrium in Nash strategies for a noticeably increased set of cases.