Potential Maximization and Coalition Government Formation

Arbeitspapier

A model of coalition government formation is presented in which inefficient, non-minimal winning coalitions may form in Nash equilibrium. Predictions for five games are presented and tested experimentally. The experimental data support potential maximization as a refinement of Nash equilibrium. In particular, the data support the prediction that non-minimal winning coalitions occur when the distance between policy positions of the parties is small relative to the value of forming the government. These conditions hold in games 1, 3, 4 and 5, where subjects played their unique potential-maximizing strategies 91, 52, 82 and 84 percent of the time, respectively. In the remaining game (Game 2) experimental data support the prediction of a minimal winning coalition. Players A and B played their unique potential-maximizing strategies 84 and 86 percent of the time, respectively, and the predicted minimal-winning government formed 92 percent of the time (all strategy choices for player C conform with potential maximization in Game 2). In Games 1, 2, 4 and 5 over 98 percent of the observed Nash equilibrium outcomes were those predicted by potential maximization. Other solution concepts including iterated elimination of dominated strategies and strong/coalition proof Nash equilibrium are also tested.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 82.2004

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Bargaining Theory; Matching Theory ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
• Subject: Coalition formation ; Potential maximization ; Nash equilibrium refinements ; Experimental study ; Minimal winning ; Regierungskoalition ; Nash-Gleichgewicht ; Test ; Regierungswechsel

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Garratt, Rod ; Qin, Cheng-Zhong ; Parco, James E. ; Rapoport, Amnon
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/117958
• Last update: 10.03.2025, 11:45 AM CET