| Abstract: |
We study the formation of a ruling coalition in political environments. Each
individual is endowed with a level of political power. The ruling coalition
consists of a subset of the individuals in the society and decides the
distribution of resources. A ruling coalition needs to contain enough powerful
members to win against any alternative coalition that may challenge it, and it
needs to be self-enforcing, in the sense that none of its sub-coalitions
should be able to secede and become the new ruling coalition. We first present
an axiomatic approach that captures these notions and determines a
(generically) unique ruling coalition. We then construct a simple dynamic game
that encompasses these ideas and prove that the sequentially weakly dominant
equilibria (and the Markovian trembling hand perfect equilibria) of this game
coincide with the set of ruling coalitions of the axiomatic approach. We also
show the equivalence of these notions to the core of a related
non-transferable utility cooperative game. In all cases, the nature of the
ruling coalition is determined by the power constraint, which requires that
the ruling coalition be powerful enough, and by the enforcement constraint,
which imposes that no sub-coalition of the ruling coalition that commands a
majority is self-enforcing. The key insight that emerges from this
characterization is that the coalition is made self-enforcing precisely by the
failure of its winning sub-coalitions to be self-enforcing. This is most
simply illustrated by the following simple finding: with a simple majority
rule, while three-person (or larger) coalitions can be self-enforcing,
two-person coalitions are generically not self-enforcing. Therefore, the
reasoning in this paper suggests that three-person juntas or councils should
be more common than two-person ones. In addition, we provide conditions under
which the grand coalition will be the ruling coalition and conditions under
which the most powerful individuals will not be included in the ruling
coalition. We also use this framework to discuss endogenous party formation. |