Veto Players (Second Edition)

March 11, 2020

In my last post, I discussed in broad terms work on a second edition of my textbook, Formal Models of Domestic Politics. Beginning with this post, I will lay out the specific changes I have made to the text.

For the existing chapters, most changes fall into one of three categories: new models, new exercises (which sometimes cover new models), and clarifications. The chapter on veto players has a bit of each. In the first edition, this covered a grab bag of models in which some players had the ability to block change in policy from the status quo. This included both the social-choice theoretic treatment of George Tsebelis, with its normative emphasis on "stability," and Keith Krehbiel's theory of pivots, with its mirror-image focus on "gridlock." One contribution of the textbook, I believe, is to show the close relationship between these two perspectives. Beyond that, the chapter presented models of portfolio allocation in parliamentary systems, à la Austen-Smith and Banks and Laver and Shepsle, as well as bargaining between veto players and special interests, as in my work with Eddy Malesky.

For each of these models, the analysis assumes an exogenous status quo; the motivating question is what movement, if any, is possible from that policy. But whence the status quo? A good answer is that the status quo is the outcome of some unmodeled prior bargaining process--for example, when government spending is "mandatory" rather than "discretionary," as in Bowen, Chen, and Eraslan. Yet just as veto bargaining in the past may affect political behavior in the present, so might veto bargaining today affect political behavior tomorrow. Taking this idea seriously requires an explicitly dynamic framework, in which the political outcome in one period becomes the status quo in the next.

The big addition to the chapter on veto players is thus a discussion of dynamic veto bargaining. But what to include? Here it may be useful to articulate a basic principle I have tried to follow: textbooks are not literature reviews. I make no claim of comprehensiveness in either presentation or citation, though I do try to get seminal contributions right. Rather, in approaching a topic, I am typically looking for a single model with a sharp message that can be written on a blackboard, with extra points if the mechanics are novel.

Wiola Dziuda and Antoine Loeper's wonderful model of "Dynamic Pivotal Politics" fits the bill. In contrast to other work in the literature, the model emphasizes shifts in the preferences of veto players rather than their identity or agenda-setting power. For concreteness, think of two veto players--two pivots, if you will--who have "left" and "right" preferences, respectively. Much of the time the two actors will disagree about whether a shift from the status quo is desirable, but with a shock to the political-economic environment sufficiently large their preferences will align. (Congressional action during the 2008 financial crisis may be a case in point.) Critically, whether the actors disagree tomorrow depends on the policy chosen today, which with the passage of time becomes the status quo. Each actor therefore has an incentive to reject changes to the status quo that from a purely static perspective are preferable, as by doing so they can lock in policy benefits in the future. In contrast to the environment of Krehbiel (or Tsebelis), gridlock in the Dziuda-Loeper model can be inefficient, as there are situations in which the status quo prevails even though the veto players would agree to overturn the status quo, if only they could commit to doing so for one period only.

As is typical, presenting this model in textbook form required some simplification, which in this case implied focusing on a two-actor, two-period setting. The first of these is just a special case of the N-player model in Dziuda and Loeper. The second is in fact a change to the environment, which in the original paper is an infinite-horizon setting. Moving to a finite horizon is not always my first instinct--I simplify the Acemoglu-Robinson model, for example, by stripping away much of the economy while retaining the dynamics--but in this instance it simplifies the analysis considerably, while retaining the core insights of the original model.

There are other approaches to dynamic veto bargaining beyond Dziuda and Loeper's. In the exercises, I include Peter Buisseret and Dan Bernhardt's model of the "Dynamics of Policymaking," in which the identity rather than the preferences of veto players may shift over time. I like using exercises to introduce models that can be presented efficiently, and in this chapter I also add Chiou and Rothenberg's discussion of pivots in a bicameral setting and Dragu, Fan, and Kuklinski's analysis of constitutional review as a veto-players game. Oh, and I have tinkered with the original discussion of pivots, with what I hope is an even clearer presentation than before.

Next up: The chapter on regime change, which for surprising reasons required some fairly substantial revisions.