Limited Foresight and Gridlock in Bargaining

This paper contributes to the study of gridlock by analyzing a model of repeated two-party bargaining in which status-quo agreements and proposal power are in general both endogenous. I introduce a key object, the foresight horizon, to index the number of downstream agreements agents incorporate into their decision-making on current policy. I find that gridlock occurs in equilibrium if and only if foresight is limited. While temporal discounting and the foresight horizon both measure “patience,” they affect gridlock in exactly opposite ways. Moreover, I relate equilibrium behavior downstream of gridlock within the specific setting of legislative bargaining to observed phenomena in democratic politics. In particular, I show that the direction of policy is responsive to the status quo and converges in the long-run of play to a distribution centered around the median voter’s expected position. I also contrast equilibrium behavior to standard results in the spatial electoral competition literature.