Partisan optimism and political bargaining
| Author | Andreas Madum,Thomas Jensen |
| Published date | 01 April 2017 |
| Date | 01 April 2017 |
| DOI | http://doi.org/10.1177/0951629816630435 |
| Subject Matter | Articles |
Article
Partisan optimism and
political bargaining
Journal of Theoretical Politics
2017, Vol. 29(2) 191–213
©The Author(s) 2016
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DOI:10.1177/0951629816630435
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Thomas Jensen and Andreas Madum
Department of Economics, University of Copenhagen, Denmark
Abstract
Partisan voters are optimistic about electoral outcomes: their estimates of the probability of elec-
toral success for their party are substantially higher than the average among the electorate. This
has large potential implications for political bargaining. Optimistic electoral expectations make
costly bargaining delay look more favourable, which may induce partisans to punish their party
for agreeing to a compromise rather than waiting, for example by not turning out to vote. Party
decision makers should take this into account when bargaining. We set up and analyse a simple
game theoretic model to explore the implications of partisan optimism for political bargaining.
We show that increased optimism among a partisan group leads to a stronger bargaining position
for their party, but may hurt its electoral prospects. Another main finding is that even high levels
of partisan optimism do not in themselves cause inefficient bargaining delay.
Keywords
Bargaining; elections; formal modelling; parties; partisan optimism
1. Introduction
Both opinion polls and more solid empirical evidence strongly suggest that voters’ elec-
toral expectations vary systematically with their political preferences. Poll numbers from
the last three US presidential campaigns show that partisan voters on either side were
much more likely than independents to believe that their party’s candidate would win.1
Delavande and Manski (2012) demonstrate that, during campaigns for US presidential
and statewide elections in 2008 and 2010, citizens stating that they were likelyto suppor t
a particular candidate estimated his or her probability of winning to be 20 to 30 per-
centage points higher than likely supporters of the opposing candidate. Other empirical
Corresponding author:
Thomas Jensen, Department of Economics, University of Copenhagen, Oester Farimagsgade 5, Building 26,
DK-1353 Copenhagen K, Denmark.
Email: Thomas.Jensen@econ.ku.dk
192 Journal of Theoretical Politics 29(2)
studies find the same general phenomenon (Dolan and Holbrook, 2001; Krizan et al.,
2010; Ladner and Wlezien, 2007; Miller et al., 2012).
Systematic divergence of electoral expectations between voters with opposing polit-
ical preferences could have important effects on political bargaining. When supporters
of a party evaluate important political bargaining outcomes, they are likely to take into
account the electoral outlook for the next election. A particular outcome will be less
well received among partisans the better they believe their party will do in the next elec-
tion, because this makes the alternative of delaying the agreement look better (assuming
that a better electoral outcome translates into more bargaining power). With the realistic
assumption that partisans are less likely to make financial contributions, volunteer, and
turn out to vote when they are less satisfied with bargaining outcomes, this implies that
a party with optimistic supporters will demand more in the bargaining process in order
not to hurt its electoral prospects. Thus, partisan optimism about electoral outcomes has
the potential to significantly influence political bargaining processes, even if politicians
themselves do not have biased expectations.
In this paper we explore the implications of partisan voters’ electoral optimism for
high-stakes political bargaining by setting up and analysing a simple game theoretic
model. The specific framing of the model corresponds, in a stylized way, to main aspects
of the negotiations over fiscal consolidation plans in both the US and Europe after the
financial crisis of 2008. Given their wide-ranging consequences and the high level of
public attention they received, these negotiations serve as natural recent examples to con-
sider when exploring the effects of voters’ electoral expectations on political bargaining.
However, the insights we derive are not limited to this setting as the model can easily
be reformulated to describe bargaining over other major policy measures. Further, the
modelling framework is also potentially useful for the study of a much wider array of
situations where several actors bargain in the shadow of electoral incentives and biased
expectations. For example, these actors could be parties in a coalition, factions within a
party, or national leaders engaged in international negotiations.
In the model, two parties play a two-period bargaining game with costly delay. An
election after period one determines the distribution of bargaining power and political
office rents in period two. A main feature is that, after an agreement in period one, the
outcome of the election depends on partisan voters’ evaluations of the bargaining out-
come, which are biased because of partisan optimism about the electoral outcome had a
period one agreement not been reached. Therefore, partisan optimism matters for parties’
bargaining behaviour in period one even though the parties themselves are not opti-
mistic. The level of optimism in each partisan group is parameterized, which allowsus to
explore how optimism levels on either side ofthe political spectr um influence bargaining
outcomes.
We show that even high levels of electoral optimism among both partisan groups
do not in themselves lead to costly delay in agreement. Intuitively, this is surprising
because a more optimistic partisan group demands a better bargaining outcome, which
again makes their party demand more in the bargaining process in order not to hurt
its electoral prospects. However, if both groups of partisan voters are very optimistic,
the parties are able to reach a period one agreement that does not satisfy either group
and thus does not change the electoral prospects of either party. In an extension of the
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