Endogenous default policy in coalition formation leads to unequal outcomes.
The article discusses how political coalitions influence economic decisions in democratic countries. The researchers explore how coalition formation and bargaining impact policy choices after elections. They introduce the concept of an endogenous default policy, where the last policy implemented becomes the default for future decisions. The study also looks at different coalition sizes, finding that supermajority coalitions are as common as minimal winning coalitions. The researchers compare endogenous and exogenous default policies in legislative bargaining models, showing that endogenous defaults lead to more unequal outcomes.