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. Gridlock occurs in equilibrium if and only if foresight is limited. I relate equilibrium behavior within the specific setting of legislative bargaining to observed phenomena in public policy-making. While there is short-run correlation of future policy with the status quo, policy converges in the long-run of equilibrium play to an invariant distribution, independent of where it begins. I also demonstrate that policy polarization — the gap between parties’ actionable proposals — is increasing in their foresight.