What point does the comparison illustrate

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Reference no: EM131449744

Question: Consider the twice-repeated version of the agenda-setter model developed in the previous exercise. The new status quo in period 2 is whatever policy (agenda setter's proposal or initial status quo) was adopted in period 1. Suppose that the objective function of the agenda setter is the sum of the two periods' policies, and that the voter's preferences are

(that is, his bliss point is 4 for the first-period policy and 12 for the second-period one). The initial status quo is 2.

(a) Suppose first that the voter is myopic (acts as if his discount factor were 0 instead of 1), but that the agenda setter is not. Show that the agenda setter offers 6 in period 1, and that the payoffs are -24 for the agenda setter and - 40 for the voter. Assume in this exercise that the voter chooses the higher acceptable policy when indifferent. If you are courageous, show that this policy is uniquely optimal when the agenda setter's discount factor is slightly less than 1 instead of 1.

(b) Suppose now that both players are rational. Show that the agenda setter's utility is higher and the voter's utility is lower than in question

Reference no: EM131449744

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