Political Bargaining: Theory, Practice and Process

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Gideon Doron & Itai Sened

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    List of Figures and Tables

    List of Commonly Used Symbols

    NThe set of all relevant players or agents in a game
    OThe set of all possible Outcomes
    i, jGeneric members of the set N of all relevant agents
    a, bGeneric elements in the set O of all possible Outcomes
    An element of or a member in
    i ∊ Ni is a member of the set N of relevant players in the game
    a, b ∊ O‘a’ and ‘b’ are elements of the set O of all possible Outcomes
    For every member i of for all members in a set
    iNFor every member i of the set N of relevant agents in the game
    σThe Strategy Space specifying all possible combinations of strategy choices by all the relevant players in the game
    ΣiThe Strategy Choice Set of player i
    σiA particular strategy of player i
    σi ∊ ΣiA Strategy of player i is an element of i's Strategy Choice Set
    A Strategy Vector specifying a particular combination of strategy choices for all the relevant players in a game
    σ ∊ ΣA Strategy Vector is an element in the Strategy Space of the game
    The Strategy Space is often expressed as the Cartesian product of the choice sets of all individuals involved in the game
    Subset
    Proper Subset
    CNA Coalition C of relevant agents is a Subset of the set N of all the relevant agents in the game
    bRiaOutcome ‘b’ is weakly preferred by agent i to outcome ‘a’ or ‘b’ is at least as good for agent i as outcome ‘a’
    bPiaOutcome ‘b’ is strictly preferred by agent i to outcome
    ‘a’ which is logically (≡) equivalent of saying that
    bRia‘b’ is at least as good for agent i as outcome ‘a’
    but not aRibbut outcome ‘a’ is not as good for agent i as outcome ‘b’
    bliaAgent i is indifferent between outcome ‘a’ and outcome
    ‘b’ which is logically (≡) equivalent of saying that
    bRiaOutcome ‘b’ is at least as good for agent i as outcome ‘a’ and
    and aRiboutcome ‘a’ is at least as good for agent i as outcome ‘b’
    The pay-off function Π is a mapping from the strategy space σ to the utility space U. Each individual assigns a utility ui(σ) to any strategy vector σ=(σ1,…,σn. This utility may vary from −∊ to ∊. The uni-dimensional line, represents this range. Therefore U, the utility space of all agents involved in the game is a subset of this the n-dimensional space
    ui(σ)The utility agent / gets when a vector σ of strategic choices is the strategic choice of the relevant agents in the game
    A game is denoted by γ and is defined by three primitives: The set of relevant agents, N, the strategy space σ that defines all possible combinations of strategic choices that individual agents can choose and π, denoting the pay-off function
    πi or xii's ideal, most preferred point
    0>δi>1A fixed discount factor that denotes the extent to which the value of the ‘pie’ diminishes with every round of bargaining
    f(β)A common prior belief where f(β) is a probability density function, that denotes the belief agents have about the probability that the number β, is any integer k ∊ Z={0,1,…, n}
    A vector including the strategy choices of all the players relevant to the game except player i
    U⊆ℜnThe set of feasible utility n-tuples vectors, the utility space
    U=(u1,…un)∊UA utility vector with i, denoting the pay-off for i ∊ N
    vThe characteristic function (or correspondence) that assigns to every subset of players a vector of pay-offs (or a set of vectors of pay-offs) that this subset of players (or ‘coalition’) can allocate to members of society
    v(C)A characteristic function of the coalition C, v(C), is a collection of utility vectors, such that if C can guarantee ui to any member, i∊N, then u is in v(C)
    γ=(v, N, u),A game in characteristic function form where v is the characteristic function, N is the set of all agents and U ⊂ ℜn is the utility space
    RiA preference order of individual i. It is a weak preference order if it is complete, transitive and reflexive (see definitions in the text)
    ℜ={R1,…Rn}A set of preference orders of individuals in society, often referred to as the preference profile of individuals in society
    R (without a subscript)The preference order of society. We would like to be able to aggregate ℜ, the preference profile of individuals in society, into R, a weak social preference order. The aggregation should take into account, at least to some minimal extent, the preference orders of the individual agents in society. We call such an aggregation scheme, a social preference function (SPF) denoted by S (ℜ, O)=R,
    S (ℜ, O)=RA social preference function (SPF) that determines the social preference relation R between every pair of outcomes a, b∊O, given the preference profile, ℜ, of agents in society, and the set of feasible outcomes O
    DsThe set of decisive coalitions. Formally, Ds is defined as: then
    The utility ui(X) that agent i derives from an outcome x∊ℜm is assumed to be a function ρi (that is specific to agent i) of the Euclidean distance between X and ρi, where ρi represents the most preferred outcome, or ideal point, of i in ℜm
    (U)XCoalition CrP is decisive by σ if for any utility function U and any pair x, y∊ℜm if all members of Cr prefer y to x — write is preferred to x by σ, which we denote by (U)x. In this way a voting rule σ can define the set of decisive coalitions Dσ
    C(σ, U)The core in a weighted voting game σ, given U, is defined as:
    ψA common belief about the electoral responses to different vectors of party positions.
    C(x, y)A binary choice procedure between any pair of outcomes x and y
    The intersection of all binary choices between x and any y ∊ ℜm. The core includes any x such that x
    x = Cm(x, y)Majority rule is a binary choice procedure where x = Cm(x, y) if and only if the number of members who weakly prefer x to y is greater than the number of those who prefer y to x
    x is in the majority core. If x is a binary majority winner against all other alternative outcomes, then x is in the majority core

    Preface

    The science of politics is the study of human interactions in what we call the ‘political sphere.’ The distinction, however, between the ‘political’ and other forms of human interaction is for the most part arbitrary. Political science is a distinct scientific discipline not because it deals with an autonomous domain of knowledge, but because a sufficient number of scholars are willing to address similar questions and problems, to conduct research by recognized methods, and to convey their ideas in a certain way. In other words, there exists a corpus of academics who are interested in producing and sharing ideas about what they define as the science of politics.

    Political science is in many ways a parasitic discipline. Taking the observations and perceptions of the Greek philosophers as the foundation for its study of the legal aspects of society and its institutions, political science borrows ideas and tools from the entire scientific realm. Moving on from the essentially normative endeavor of defining good and bad and what ought to be, it now predicts and shapes what is and what will be. It is in the context of its current manifestation that our book must be read and understood.

    Perceiving reality as composed of individuals who have to develop certain arrangements for living and working together is at the core of the discipline described here. These arrangements are either constructed voluntarily by individuals or they are imposed upon them. Politics then, deals with thought-guided arrangements arrived at by continuous struggle within real and perceived constraints. The specific human context often affects the kind of arrangements reached. In this sense, the United States or Canada are political arrangements that emerged on a national level and assumed a certain form. But so are the Polish government, the British parliament, the coalition of parties in Denmark, or the congressional lobby that was formed to shape legislation for equal rights. Arrangements are made at the local and regional level, between groups and nations, between individuals, and between individuals and various types of collectives. These arrangements may be explicit or implicit, building upon sets of ideas rooted in the minds of the individuals. Often, the products of human interactions translate into durable institutions. Guided by laws, regulations, and norms, these arrangements help individuals obtain their goals.

    Underpinning this general view of politics is an understanding that individuals differ in age, sex, belief systems, tastes, preferences, interests, aspirations etc. Despite these differences, they opt to live together and to subject themselves to a particular collective arrangement. In fact, it is often the political arrangement that serves as the principle means by which they bridge their differences. This bridge is constructed by finite or ongoing processes of bargaining.

    The process of political bargaining is, then, the real stuff of politics. This book reviews various modalities of bargaining reflected in different forms of human interaction. From the hypothetical ‘state of nature’, we move up through higher manifestations of human aggregation until we reach the institutionalized political level. This book is concerned with the process: its setting, the interests of the players involved, the conditions and properties that affect their calculations and, consequently, their ability to obtain desired outcomes.

    Surprisingly, very little systematic attention has been paid by political scientists to the theoretical study of political bargaining. Whilst many scholars of economics, game theory, organizational theory, international relations and psychology, view bargaining as an important tool in their fields, we have found no study that describes this phenomenon as central to the study of political science. In this respect, we present an innovative approach to the study of politics. Our goal is to present this approach and at the same time to introduce the basic methodological tools necessary for an understanding of this analytical framework. Following the example of our teacher, William H. Riker, in his Liberalism against Populism, we try to provide the reader with a tool box, whilst at the same time providing clear guidelines as to how it can be used. We also have to admit to sharing our fundamental world-view with the reader, for which we apologize in advance.

    Of the many colleagues, friends and students who assisted us with comments and suggestions on various drafts of this manuscript, space and professional restraint enable us to credit only few. Much of the hard work in putting this book together was supported by NSF grants SBR 94–22548 and 96–17708, and Ben Gurion University in the Negev. Anat Shenker and John Ginkel carefully combed our manuscript. Gary Miller and Christina Fong made many helpful suggestions along the way. Steven Brams, Douglass C. North, Norman Schofield and Kenneth Shepsle continue to inspire us. But, to paraphrase Isaac Newton, if we saw a bit further it is because we stood on the shoulders of a giant, those of our beloved teacher, William H. Riker, to whom we dedicate this book.

    On a personal note we want to thank Lucy Robinson, our editor at Sage Publication for her patience and support for this project and Susan Kennedy, our English editor, and Jonathan Nadav our technical editor. We thank our parents and children for keeping it all in humble perspective. Last but not least, Gideon Doron thanks Becky Kook and Itai Sened thanks Sarit Smila for the wisdom and kindness they exercised in the important role they played in our lives during the period we spent researching and writing this book.

    Gideon Doron and Itai Sened, , Tel Aviv and Louis

  • Conclusion

    Relationships between individuals and groups that define the essence of politics are as old as human civilization. In fact, we cannot speak of civilization in any meaningful sense without referring to its political aspects. This is so because any society is partly defined by the nature of its organizations and institutions.

    Organizations and institutions induce the order and the direction of the flow of decisions made in society. They direct the choices made over collective priorities and devise means to satisfy collective needs. They determine which priorities deserve immediate attention and which can be put off to the future. These institutions may include, depending on the stage of human development, rituals, customs and manners, art, armies, police and courts, laws and regulations, symbols of identity, or schemes of distribution and redistribution of material resources.

    Over time, variations among societies are merely the outcome of choices made in the context of changing circumstances. But these choices are always made through an ongoing process of bargaining between individuals.

    While politics is a phenomenon that began with the first man and woman, its systematic and scientific study is relatively young – younger even than the study of economics. Perhaps the impressive advancements in the academic understanding of economics stem from the fact that this field of knowledge is better defined and delineated, in the sense that there is a clearer demarcation of what is included and what is excluded in the subject matter. It also utilizes established rules of transformation and interpretation, formal methodology and deductive logic. Political science lags way behind.

    Would it make politics a more advanced science if the lessons of economics were applied to it? This was the belief and strategy in the 1950s and 1960s when efforts were being made to make the study of politics more scientific. Anthony Downs (1957) and Duncan Black (1958) were two notable economists whose methods influenced political scientists, in particular William Riker (1962) and his students. The formal language of science, the deductive logic and the rigorous methodology were adopted and applied to well-defined political phenomena such as coalitions and elections.

    Ignoring the variation in starting points, the scientific study of politics still lags behind the scientific study of economics on account of difficulties in defining interpretation rules, problems in identifying stable and predictable outcomes, and a preoccupation with traditional perspectives.

    Rules of Interpretation

    Economists have a comprehensible medium to compare two or more items: money. Money is used to substitute for utilities, or for values of complex baskets of goods and services which otherwise, as in the case of ‘apples and pairs’, could not be compared. Money is a valid measuring tool, even if it often lacks accuracy and precision. Money is universally understood and widely sought after. Individuals, firms and corporations are all involved in an attempt to maximize (or optimize) revenues. We can define this attempt as aiming to gain more profit, benefit or revenue, depending on the approach used and the questions asked. Political scientists have no similar conceptual medium.

    For years the study of politics has been guided by and has relied on problematic concepts. One salient example is the concept of ‘power.’ Politicians and nations were said to enter and play the game to maximize power. But what this concept means is not very clear (Riker, 1964b). Take another example, the concept of ‘political culture’. Political culture is a subject that has attracted the attention of many students of politics. Even so, it is still not very clear what the term political culture means. While attempts have been made to mimic economists and to define a political equivalent for money, no political concept has yet been found with similar interpretation attributes.

    This book does not provide a solution to this conceptualization problem. We explored the concept of political bargaining, a concept that is narrower in application, but clearer in meaning. Thus, for example, when we speak of the median voter theorem, or maximization of the probability of re-election, we are bringing the stuff of politics into the scientific sphere.

    Explanations and Predications

    Economists seem to have an easier task than political scientists: through their methodology and sets of assumptions they can identify general or local equilibrium points. If not in practice, then at least in theory. If not for the short term, then at least for the long term. Applying the theory, they can also predict future occurrences. Explanation and prediction is what science is all about (Hempel, 1966). It is more difficult to identify equilibrium points in political science. The reason for this is related to the nature of political phenomena.

    We may approach the study of politics from the top or from the bottom. From the top, from the standpoint of politicians — those who affect the ‘authoritative distribution of values’—social choices may reflect their own preferences and not those of their constituents. The economic analogue for such a situation would not last long: suppliers must meet the preferences of consumers or risk bankruptcy. From the bottom, from the standpoint of the citizens, the situation is no better. Both from a theoretical point of view and from a practical examination of reality, individual values, when aggregated into social choices, often lead to obvious inconsistencies. In fact, it has proven impossible to devise a scheme that would accurately reflect the desires of individuals in society (Arrow, 1951; Sen, 1970). Thus there is always some measure of arbitrariness associated with the political choices arrived at by societies. The analogue in economics is the free market, where no such arbitrariness can survive. The central result that defines the very discipline of contemporary neo-classical economics states quite explicitly that in a market with enough buyers and sellers, sufficient information and well – defined property rights, the choices a society arrives at will necessarily be an optimal allocation of the scarce resources available. Not ‘good’, not acceptable, but deterministically optimal.

    In politics we arrive almost at the other extreme. Because preferences over alternatives may be cyclical, it is difficult, indeed almost impossible, to evaluate whether social choices are the expression of aggregate individual preferences or if they are the result of a particular scheme employed to influence them. Thus, for any prevailing social outcome, a majority of people may prefer some other outcome. We cannot escape either from the arbitrariness associated with decisions made by politicians, nor can we be sure that those politicians selected by our democratic processes truly represent the people. Public preferences may thus be in a state of constant flux, making any political stability tenuous.

    This disturbing finding and inference is not new. It was labeled by Riker (1980) as the ‘disequilibrium of tastes’, denoting the essence of the democratic dilemma. He writes ‘outcomes are the consequences of not only institutions and tastes, but also of the political skills and artistry of those who manipulate the agendas, formulate and reformulate questions, generate ‘false’ issues, etc. in order to exploit the disequilibrium of tastes to their advantage’ (Riker, 1980: 445). People vote, but the outcome of their choices may, at best, reflect an alternative that only tangentially represents their position.

    There is today a considerable body of literature, much of which is cited in this book, suggesting that the institutional framework of the decision-making process induces equilibrium (most notably, Shepsle, 1979, 1986). Institutions in this sense are counter-cyclical mechanisms, they break cycles and produce stability. Since we can easily observe some measure of stability in the performance of the various organizations that define the fabric of a polity, we can accept the above-mentioned, so-called, neo-institutional explanation as a perfectly reasonable one. This book is built on the insights of this approach, but also develops its own explanation for the persistence of societal outcomes. The origin of social stability is maintained by social institutions, but is arrived at through an ongoing process of bargaining. To obtain stable choices (those which can be explained and thus predicted) in the framework of institutions and in the context of inconsistent preferences, people engage in a bargaining process. They bargain to stop cycles or to initiate them, they bargain over particular institutional configurations and their contents; they bargain over any aspect of what we conventionally refer to as politics.

    The Political Bargaining Perspective

    We believe that the particular perspective presented in this book — that of political bargaining — provides a realistic and hence a more profound explanation of politics. In spite of the impressive developments of recent years, and unlike advances made in economics, much of the study of politics remains descriptive (i.e. historical or statistical in essence) or normative. It is still dominated by answers to questions of ‘what is’ or ‘what should be’ and geared less to the positivist notion of ‘why’. But without providing answers to the ‘why’, we cannot begin to hypothesize on the causal relationships linking the various components under investigation.

    This book demonstrates how a view of politics as a bargaining process changes our understating of its nature. Utilizing several illustrations, it provides different but nonetheless verified explanations to phenomena that have been referred to as the conventional truths of the prevailing political reality. Only by emphasizing the role of bargaining in politics and in the way politicians determine the nature of the choices made in a given polity, could we begin to challenge the conventional wisdom associated with the notion of the social contract (Chapter 3); roles of parties and special interest groups (Chapter 4); or the nature of representation (Chapter 5).

    This social contract is the result of an ongoing bargaining process between the rulers and the ruled, mitigated (or sometimes fueled) by the ongoing struggle between conflicting special interests. This and other political developments are outcomes of an ongoing bargaining process between various agents in any given society. The fact that on a macro level, much of the content of our political systems and their policies are similar, is perhaps proof that we are not so different from one another. We behave similarly, and arrive at more or less similar choices sooner or later because the logic of bargaining presented in this book presumably affect us all in the same way. If this is truly the case, then we have revealed potential grounds for generalization and for the advancement of the science of politics.

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