Does Concession Always Prevent Pressure?

Abstract

In Potters and Van Winden (1989) a repeated game model is used to analyze whether and under which conditions a government would be put under pressure (punished) by a pressure group for not conceding to a certain claim. In the model it is assumed that the punitive (aggressive) action is not used by the pressure group if the government concedes to the claim. The same kind of assumption is used in similar models. In the models of Selten (1978), Kreps and Wilson (1982) and Milgrom and Roberts (1982), for example, the monopolist cannot employ an aggressive marketing strategy if the entrant stays out, in Calvert (1987) the political leader cannot punish if the follower obeys, in Alt et al. (1988) the hegemon cannot punish if the ally obeys. In the present paper it will be examined to what extent the outcome of the game changes if this assumption is dropped, that is (in our terminology), if the pressure group is allowed to use the punitive strategy even if the government takes the action which is preferred by the group.

We are grateful to Eric van Damme, Werner Güth, Akira Okada and Reinhard Selten for helpful discussions. We alone are responsible for any errors and the views expressed.