Agreements and Delegation

in Coalition Policy-Making∗

Albert Falcó-Gimeno†

March 27, 2009Draft, not for citation

Abstract

Coalition governments can make decisions in a number of ways, at leasttheoretically. At an extreme, coalition partners can specialize and individ-ually decide policy in their ministerial jurisdictions. At the other extreme,parties sharing o�ce can make use or their veto power and produce collec-tively each decision in each policy dimension regardless of portfolio alloca-tion. This paper provides a theoretical account of this variation assumingthat parties in coalitions arrive at a compromise policy agreement thatafterwards has to be delegated to individual ministers for its execution.Agency problems may arise depending on a number of conditions, arrivingat equilibria either closer to specialization or closer to perfect compromiseobservance. Finally, the paper does also test the implications of the theo-retical argument for the incentives to invest in ex ante oversight and o�ersevidence in support of the positive e�ect of ex post legislative amendingcosts on the weight of procedural clauses in coalition agreements and onthe appointment of watchdog junior ministers.

1 Introduction

Among political science �elds, research on coalition governments has been oneof the most productive. Under what conditions coalition governments form,which parties are more likely to coalesce, how are portfolios allocated, are theymore or less likely to survive, or how voters assign responsibilities when judgingtheir performance, are only some of the questions political scientists have soughtto answer regarding multiparty governments. Yet notwithstanding all previous

∗Prepared for ECPR Joint Sessions' workshop `Party Government and ParliamentaryDemocracy in the New Europe' (April 14-19, 2009, Lisbon). Work in progress, commentsgreatly welcomed. Previous versions of this paper were presented at the 2nd Graduate Net-work Conference (December 11-14, 2008, CEU Budapest) and at Oxford Politics and Interna-tional Relations Graduate Research Workshop (March 11, 2009, Nu�eld College, Universityof Oxford). I would like to thank all the participants for their comments, criticisms, andsuggestions.†Universitat Pompeu Fabra, Barcelona & Juan March Institute, Madrid.

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works, Timmermans (2006: 281) states that �[t]he formation and terminationof government coalitions across countries have been theorized and analyzed ex-tensively. The key research subject ahead is what happens between�.

In a similar line, Huber and McCarty (2001: 346) argue that �[m]odels of bar-gaining in parliamentary systems typically focus on the government formationprocess. Their objective is to understand either which parties enter governmentcoalitions (e.g. Austen-Smith and Banks 1988; Baron 1991, 1993) or which par-ties receive speci�c portfolios within the government (e.g. Austen-Smith andBanks 1990; Laver and Shepsle 1990, 1996). These models implicitly assumethat policy outcomes are determined at the time of government formation andthus there is no need to examine the dynamics of bargaining processes thatoccur after formation is complete�. And the theoretical problem emerges here.Parties may indeed form a coalition government with those partners with whomthey share some complementary interests and allocate portfolios in accordanceto these interests. Insofar an absolute complementarity exists, no problematicbargaining between parties should take place once in o�ce. However, �[...] whilethe parties that make up a coalition may have more or less compatible policypreferences, it is hardly ever the case that all of their policy preferences can berealized simultaneously� (Müller and Strom: 166).1 The once-in-cabinet-game,hence, starts to be a more complicated one.

Laver and Shepsle (1994a: 296-297) argue that the model of cabinet decision-making will be very di�erent depending on whether we assume that governmentpolicy is based on the fact that cabinet ministers have discretion in their owndepartments to act independently from the other partners, or we presume thatgovernment policy simply re�ects a process of collective decision-making in ev-ery dimension instead. There is thus room for potential tension between thecollective decisions of the cabinet as a committee and the individual decisionsof its members. So, which model is chosen and under what circumstances?

Generally speaking, this question has been solved by assumption, and varia-tion in cabinet decision-making models has seldom been considered. Curiouslyenough, these assumptions about the decision-making rule in multiparty settingshave been dramatically di�erent from scholar to scholar.2

The so-called portfolio allocation model presumes that coalition cabinets aretypically based on ministerial discretion, since cabinet ministers have consider-able in�uence over the decision-making process in their area of jurisdiction. Itcan be said, thus, that the party which gets a given portfolio sets its policy(Laver and Shepsle 1996). In a later work, Laver and Shepsle (1998) put it thisway: �Health policy is heavily conditioned by the partisan political agenda ofthe minister of health, defense policy by the political views of the political partyof the minister of defense, and so on�. As Bräuninger and Hallerberg (2003) putit, one of the implications of these models may be that the bargaining game endsonce the government is formed and portfolios allocated. Parties bargain overportfolios rather than policies. Although �to be fair� the portfolio allocation

1If so, parties would essentially resemble each other perfectly2See the debate between Warwick (1999a,b) and Laver and Shepsle (1999a,b) on getting

the cabinet decision-making assumptions right.

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approach does not explicitly deny the existence inter-party policy compromisesbeyond ministers' will, it is true that it implies that once each party controlsits ministries it will have considerable autonomy enough to set policy in thejurisdictions of `their' portfolios.

A radically di�erent view is the one posited by the veto player model de-veloped mainly by Tsebelis (1995, 2002). Regarding intra-cabinet politics incoalition governments, the application of the veto player approach implies thatthe agreement of every party in the government is needed to produce a changeof the policy status quo in every single dimension. It can be easily seen that theimplications of this approach are dramatically di�erent from those of the portfo-lio allocation model. Whereas in the latter the control over a portfolio gives theparty the entire ability to set its most desired policies in the jurisdiction of theirministries, each minister needs the consent of the other governmental partners ifthe veto player approach applies. Hence, it assumes coalition governments to bebased on negotiated programs that re�ect the interests of all coalition partnerson all issues, and especially of those with veto power over the status quo.

But the aim of these two approaches is not really to explain the prevailingdecision rule within cabinet. Although it is true that both make a good e�ortto justify why theirs should be the case, their main objective is to analyze thee�ects of the inter-party bargaining model they support on other dependentvariables. In sum, the decisions in a multiparty government are said to bemade in `this or that' way, by assumption. But the question is: Is variationpossible? While in some multiparty settings `this' could apply, in others `that'might prevail. It may well be the case that none of the approaches above was`wrong', but instead that certain conditions are conducive to certain forms ofdecision-making. As far as I am concerned, this possibility is not considered insuch models.

Variation is actually taken into account in Bräuninger and Hallerberg (2003).Using Hallerberg and Von Hagen's (1999) categorization of �scal governanceforms, they identify �efdom, commitment, and delegation as possible decision-making models that have crucial consequences on �scal policy. Roughly put,�efdom would be characterized by the ability of each minister to control herspending area, delegation by the key role of the �nance minister in negotiatingthe budget, while commitment by an agreement of all government members.Yet their approach is still largely descriptive. Forms of �scal governance willalmost certainly be endogenous to something else in the �rst place. They arenot simply there, exogenously. Similarly, the di�erent collaborating authorsin Laver and Shepsle (1994b) try to identify which are the cabinet decision-making models that prevail in di�erent countries. However, the raison d'être

of this compilation of case studies is again essentially descriptive, trying to �ndout which rule prevails?

Yet we still do not know why do certain forms of governance or decision-making models among those available for coalition governments do actuallyprevail at a given place and time. This is exactly what we have to account for.What is missing is the explanation of the decision-making rule/form. What leadssome multiparty governments to decide in a certain way and di�erent decision-

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making models to apply in other governments of the same type? I start withthe suspicion that certain conditions will make a ministerial government morelikely whereas collective decision making will arise in other scenarios. Let mequote Müller and Strom (2008: 180) here for a very precise account of what thequestion ahead is:

As we have seen, the analytical literature on parliamentary institutions containsone prominent theory (Laver and Shepsle) that stresses the decentralization ofcabinet authority and one (Tsebelis) that emphasizes its centralization. Sinceneither of these models is entirely plausible for all cabinet coalitions, we needto identify the conditions under which each is most likely to be realistic. Thebest way to do so is by identifying the mechanisms by which parties can com-mit themselves to centralized authority, and examining the e�ectiveness of thesemechanisms. If coalition partners are not content to decentralize authority en-tirely to individual `line ministers', they must devise institutions by which cen-tral coalition decisions can be enforced. But if and when such mechanisms areunworkable, then only decentralized authority [...] is feasible.

The remainder of the paper is organized as follows. Next section considers del-egation problems within multiparty cabinets as a theoretical strategy to answerthe general research question. It also presents a game-theoretic model to ac-count for variation in how coalition governments may end up deciding policy.Section 3 applies the theoretical framework to the study of ex post vs ex anteoversight devices of coalition compromises and o�ers related evidence. Finally,section 4 summarizes the key points of the paper and concludes.

2 A Theoretical Approach

2.1 Agency theory to the rescue

One way to approach the explanation of variation in the modes of coalitiondecision-making is to think of them as ex ante choices. That is, in a governmentformation process a party A may agree to take charge of jurisdiction X (and thusset policy X to its ideal point) in exchange of letting its partner B to deal withjurisdiction Y's issues and set its most preferred policy there, and vice versa.Or on the contrary, both parties could exercise their veto power over the statusquo and make the content of their agreement in terms of X and Y policiesto be independent from portfolio allocation. In sum, they could agree on adecentralized policy-making style or on a centralized one. Yet one may consideranother option. Instead of allowing for variation in the decision-making modelat the time of setting up the agreement, we may let this variation appear onlyonce the cabinet has been formed.

Along the lines of the veto player approach, I assume that parties arriveto an agreement re�ecting compromise in each policy dimension, given parties'policy preferences, their bargaining power, and a status quo. But do the agreedpolicies need to be the same as the �nally implemented ones? The answer willdepend on to what extent is the policy agreement at which the coalition hasarrived enforceable.

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Coalitions, as well as every other government, have to resort to delegation toparticular agents. The amount of information, resources, and broadly speaking`work' that cabinets have to deal with is so huge that it is virtually impossibleto get rid of delegation. That may be one of the reasons why ministries arecreated. Ministers serve as agents for the cabinet, having to take charge of theissues under their policy jurisdiction. But along with the cost-saving bene�tsthat delegation to cabinet ministers provides, risks of agency losses do alsoemerge. We know this quite well from economics but also from political science(e.g. Kiewiet and McCubbins 1991; Lupia and McCubbins 1994a,b; Epstein andO'Halloran 1999; Huber and Shipan 2002; or Strom et al. 2006). Questions arisesuch as: To what extent will agents ful�ll the assigned tasks in the exact termsestablished by the principal? And why should they do so? Most likely, there ispotential room for agents to take advantage of their situation and behave moreaccordingly to their own preferences and at the expense of the principal's.

In the matter at hand, the principal is the cabinet, whilst the agents are theministers.3 And that principal is not a unitary one with a clear preference onevery single issue. On the contrary, it is a collective principal.4 Its members(parties in the coalition) have to reach an agreement in the �rst place andestablish a contract (compromise policy agreement) with each agent (ministers)who are those entrusted to implement the policies embodied in the contract.This is the broad scenario. But as in all other principal-agent (PA) relationships,there is the risk of agency loss. Agents may fail to act in the principal's bestinterest since either adverse selection, moral hazard, or both problems at thesame time may be there. Hence, ministers could theoretically deviate from theterms in the contract and act in their own interest. Thus, only the appropriateoversight devices will avoid agency losses.

In Martin and Vanberg's (2005: 94) words, �[c]oalition government typicallyinvolves delegation that provides considerable discretion to ministers in draftinglegislation�. And this is so regardless of the previous inter-party agreement.The agency losses may come from the `amount of deviation' toward their ownideal point that ministers succeed to get passed.5 One can easily observe thatcoalition governments are very peculiar cases, since the parties that form theprincipal delegate to two very di�erent types of agents: They �delegate not onlyto their own party's cabinet representatives, but to ministers from their party'scoalition partners as well� (Thies 2001: 580). Therefore, at least one member ofthe collective principal will bene�t if a minister (their own ones) deviates from

3Delegation is at the heart of democracy. In such a political system, almost every politicalrelation could be thought in terms of principals and agents. In parliamentary democracies,voters delegate to representatives in the Parliament through elections. Parliamentary repre-sentatives delegate to a government that at the same time choose ministers as agents. Andeven ministers have to delegate to bureaucrats at some point. Besides, intraparty delegationplagues all previous relationships. Yet in this work I will only concentrate to the relationbetween cabinet parties and ministers in coalition governments, notwithstanding that otherdelegation issues should be taken into account to have the whole picture. That is, in myanalyses I keep all the other relations constant.

4See Lyne and Tierney (2003) for the di�erence between a collective and a multiple principal5Ministerial shirking has been one of the terms used to describe this behavior.

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the agreement content pushing policy closer to the ideal point of the party.Closer than if the agreement clauses had been ful�lled. Thus, in multipartygovernments the incentives for keeping tabs on agents' behavior are especially(if not only) important for the partners not controlling that jurisdiction.

So when will ministers refrain from deviating and stick to the agreed policyagenda? Will coalition partners be able to preempt such behavior? Underwhat conditions? The nice thing about these questions is that answering themis actually identifying why do coalitions' decision-making models vary, which isthe more general question. In other words, the conditions that make di�cult thecontrol over ministers' deviations are also the conditions making more likely thescenario where each party sets the policy it most prefers in the jurisdictions itcontrols (labelled as decentralization, �efdom, departamentalism, ministerial orportfolio allocation model of cabinet decision-making, depending on the author).The opposite is true for a more centralized policy-making style.

Hence, parties in the formation stage may not be choosing a specialization(that's my label) style of making up the policies of the coalition. On the contrary,I opt for considering a specialization model of decision-making in coalitions thatparties may not help to escape given certain conditions. Specialization will occurwhen ministerial deviations from the contract policies are too costly to avoid forthe coalition partner, whereas a more compromise-friendly policy-making stylewill emerge otherwise. It is thus through delegation theory that we can accountfor variation in the model of decision-making of a coalition cabinet, even whenparties have arrived to a compromise policy agreement in the �rst place. Then,the research question is under which conditions it is more likely that ministers'

deviations from the compromise policies succeed. That is making endogenousthe actual policy-making form with which a coalition e�ectively ends up. In thefollowing pages I propose a very simple game-theoretic model that is intendedto take a step forward in this direction.

2.2 A model of coalition policy-making

The mutual policy commitments made by parties and entrusted to ministerialo�ces at the time of goverment formation will only be credible provided that i)it is in the parties' best interest to make their ministers' draft proposals equalto the policy agenda in the agreement or ii) if the latter is not, it is in thecoalition partners' best interest to raise their voice against the deviation and(successfully) amend it. These are means by which policies agreed will coincidewith those eventually implemented. If either the former or the latter occur,we will see in fact a centralized policy-making. But if not, deviations from acompromise policy agenda would arise and succeed. And then the scenario willbe one in which each coalition partner sets policy to their ideal point in thejurisdictions under their control (namely, a specialization-style policy-making).

And what de�nes the best interest of coalition parties? In other words,what do they derive utility from when playing the policy-making game withincabinet? a) They will �rst take into account the distance between their policyideal point and the policy �nally implemented. This typical approach in spatial

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models implies that the more the distance, the less the utility. b) Anotherimportant thing is parties' walkaway value (Lupia and Strom 2008: 63-66).6

The credibility (and thus strength) of negotiators' positions are determined bywhat they would get by walking away from the bargaining table. It is worthremembering here that both during the government formation negotiations andonce constituted, exit is always an alternative that dramatically shapes whathappens in the inside game. That is why, when deciding the �nal policies,coalition partners will also consider the utility derived if negotiation fails. If afailure brings the government down, then parties will lose the utility from thespoils of o�ce, but this loss will be weighted by how appealing is the exit option.The more appealing, the less serious is the loss of spoils. c) Recall also thatin case a minister deviates from the contract, the other parties should evaluatewhether raising their voice is valuable or not. And that makes amendment costsanother crucial aspect in the argument. The more the costs parties have to payso as to amend the proposal of another party's minister, the less the utility.

I build on Martin and Vanberg's (2005) utility function but introduce somemodi�cations. Thus, the utility function for a party i presented here addsthe walkaway value, considers a discount factor, but omits the position-takingbene�ts.7 This is the following:

U i = −(2− δ)|Xi −X∗| −Ki − E

Where Xi de�nes party i 's ideal point on policy X and superscript * to X

indicates the actual policy eventually adopted. E captures the (institutional)amendment costs which are independent from i,8 whereasKi refers to the loss ofspoils as a consequence leaving the government.9 Finally, the discount factor δ(ranging from 0 to 1) weighs the disutility parties receive from policy. If parties

6Reservation wage is an equivalent term in economics.7Martin and Vanberg (2005: 96) consider that parties in coalition governments can reap

position-taking bene�ts since �[t]he �unveiling� of a legislative initiative by a minister generallyreceives considerable media attention, and parties can use bills they initiated to �claim credit�during election campaigns. As a result, by introducing a bill that corresponds closely to itsown (and its constituents') ideal policy, Party A can distinguish its proposed policy fromthe coalition compromise and claim credit for attempting to pull policy toward the preferredoutcome of its constituents�. I do not take into account these extra incentives since they mightoverlap with the disincentive through the irresponsibility of breaking an agreement (havinggiven the word in a gentlemen's agreement, for instance), and it would require assuming theformer to be greater than the latter. Since there may be two forces running in oppositedirections I prefer to leave this parameter aside.

8This is the d > 0 in Martin and Vanberg's (2005) article.9Actually, Ki should be considered as a weighted product taking the following form

(1−wi)(1−t)Si, where S would capture how the party values the spoils of o�ce, t would indi-cate the maximum time ahead of possible alternative o�ces before confronting elections (i.e.the proportion of consitutional inter-election period -CIEP- already passed), while wiwouldmeasure how valuable is the situation of being outside government for party i. Hence, themore next elections approach and the more appealing the exit options, the less serious is theloss of o�ce spoils for each party. Nonetheless, I decided to consider this product as a constantK since in this paper I am not interested in analyzing the e�ects of variations in t and w,which I will do. To ease readibility, thus, from now on I will be refering to Ki as how costlyis for party i leaving the government overall (that is, implicitly taking into account t and w).

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are somewhat impatient (i.e. δ < 1) and the adoption of the �nal policy isdelayed, the bene�t they get from the implementation is lowered (or in otherwords, the disutility is higher).

I model the game as a sequential one played by two parties (A and B) andassume the following:

1. The utility functions take the form mentioned above, though I force allparameters to be numerically greater than 0 and that party A's idealpoint in X is larger than party B 's one (XA > XB), while * policieslie somewhere in the middle. This causes the utility functions to changeslightly. For party A, UA = −(2 − δ)(XA − X∗) − Ki − E, while partyB 's utility function takes the form UB = −(2 − δ)(X∗ −XB) −Ki − E.I also assume that XC will always be preferable to XQ for both parties,everything else the same.

2. The government formation negotiations have already taken place and al-located policy jurisdiction X to party A.

3. Policies agreed at the time of formation (XC for policy X ) have beennegotiated dimension by dimension. That is why XC lies somewhere inbetween XA and XB .

4. The game takes an extensive form, where party A, via its minister injurisdiction X can draft legislation deviating toward the ideal point of itsparty (d) or sticking to what was agreed for policy X (a). Then, if theformer happens, B can react in three ways: simply nodding its head toA's deviation (n) allowing the policy implemented to be XA; amendingthe ministerial draft through legislative review (l) returning policy X tothe agreed point XC but paying the cost E ; or expressing its discontentand threaten to rock the boat (i.e. leaving government) if minister of X(i.e. party A) does not correct its deviation (o). Finally, if B opts for thelatter, I borrow poker's terminology and A can either `call' to B 's threatand bring down the government (c) or `fold' and get back to XC agreedin the formation stage (f ). If the former happens, the parties pay the costof the government termination Ki and policy X stays at the status quopoint (XQ).

5. An additional assumption underlying the whole game is that delegationproblems do only occur between parties and not within parties. A partydoes not encounter any problem in making its minister's potential devia-tions pursue the party's ideal point. Put di�erently, the minister's payo�is assumed to be the same as that of its party's. Thus, the player makingthe proposal is in fact the party, although the minister acts on (perfect)behalf of it. That makes matters more parsimonious.

6. Besides, the delegation problems that arise do not stem from informationasymmetries. Party B �awlessly knows if party A has deviated or notand can act accordingly. This is why the game is conceived as a perfectinformation one.

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The graphical representation of the game is provided in the next �gure:

[Figure 1 about here]

I solve the game by backwards induction and multiple equilibria emerge. Atable in the appendix summarizes the four equilibria found. One of the thingsthat stands out the most is the existence of a specilization equilibria undercertain conditions. So indeed, there are conditions under which every partysets its ideal policy (only) in the jurisdictions it controls, whereas there areothers that make the ful�llment of what has been compromised hold. This is tosay that depending on the circumstances faced by a coalition, we will witnesseither a purely ministerial cabinet or a fully centralized style of making policyas stipulated in the coalition agreement. The nice thing about this framework isthat it provides theoretical ground to explain variation in the decision-makingmodel that operates within a coalition cabinet. It thus escapes assumptionsabout it and endogenizes the way these governments go about deciding anddividing policy.

The most interesting theoretical �ndings are the following.

• When the cost of a government termination is too high for party A (largeKA), it will never `call' to a en exit threat of B and get back toXC instead.Anticipating such a `fold', B would threaten to leave government in casethe draft of the minister of X deviates from the agreed terms. Since thatwould end up to the implementation of XC , A will anticipate all thesemovements and prefer not to deviate in the �rst place. In this way, theadopted policy will be the same, but the delay that positively weighs thedisutility will be avoided. The equilbrium is thus one of compromise style(centralized way of making policy).

• However, when this cost KA is such that A would accept B 's threat tobring down the government, several things can happen:

� If B �nds the exit option appealing (low enough KB), it will use theexit threat when facing a deviation by A. But then although bringingdown the government is not too hard for both players, A will preferto stick to the agreement in the �rst place and refuse to deviate (sinceit prefers XC to XQ). This leads to a compromise equilibrium again.

� If B �nds the cost of enacting a legislative amendment of a hostileminister's draft to be low enough (small E ), it would play l whenfacing a deviation. Since the �nal result in terms of policy would beXC , A will not deviate in the �rst place in order to avoid the delaycaused by the amendment process and get XC likewise, but withoutpenalization. The equilibrium is one where the policies compromisedin the formation stage are e�ectively adopted afterwards.

� However, if E is large (i.e. higher costs of legislative review), andB 's exit option is not very appealing, this party will have no choice

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but accepting A's deviation. That is, it will �nd it in its best interestto nod its head to the partner's hostile minister instead of payinga too high cost for the amendment or su�ering the consequences ofa government termination. As one can see, the policy adopted injurisdiction X is that of the ideal point of the party that controlsit (XA). Hence, we are facing an equilibrium in which the partydictates the policy it most prefers in the ministerial jurisdiction ithas.

Thus, when adressing variation in the decision-making model that prevails in acoalition government, the rough �nding is that in general the higher the e�ortneeded to amend the proposals of other parties' ministers, the more likely is toget closer to specialization/decentralization when making policy. This is quiteintuitive. If institutions allow this cost to be low, no deviation from the veto-driven policy agreement will occur. By contrast, everything else the same, aspecialization scenario where coalition partners set their most preferred policyin their ministries will emerge when amending is costly given institutions. Thispoints to the very important in�uence of the existence of ex post institutionalmechanisms of oversight on to what extent are the agreed policies followed oncein cabinet. If these institutions exist by default, there is no need for the coalitionpartner to pay a high cost for initiating itself an ad hoc legislative review processand it is thus cheaper to amend a deviating minister's draft.

This is close to Kim and Loewenberg's (2005) account of oversight insti-tutions (German parliamentary committees) as devices for the enforcement ofcoalition treaties. It is also similar to Martin and Vanberg's (2004, 2005) claimthat parties make use of parliamentary institutions to scrutinize the proposals oftheir coalition partners' ministers to which they have been forced to delegate im-portant agenda-setting powers in order to enforce the coalition bargain. Then,will variation of ex post oversight institutions have any e�ect? It is clear thatcountries vary in this institutional aspect (and sometimes even within a countryacross time), making the legislative review more or less costly. And if we believethe story told so far, that should certainly have an e�ect on how do coalitiongovernment manage policy-making. Next section applies the theoretical frame-work above and concentrates on one of its possible empirical consequences: thedesign of ex ante oversight mechanisms when ex post ones are costly.

3 Investment in Oversight: Ex ante vs Ex post

Mechanisms

As said, coalition parties have several instruments by which hold partners' min-isters accountable. There exist both ex ante and ex post mechanisms to do so,such as ministers' screening, written contracts, junior ministers, or legislativereview institutions, among others. In the last section I have concentrated on thelatter, which is an ex post mechanism ready to react against ministerial drafts.

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I have argued that the more costly is the enactment of these legislative amend-ment processes, the more likely is that ministers' deviations go unamended (andthus the more probable is a specialization style of policy-making). In the currentsection I try to pose some hypotheses regarding coalition partners' incentives toinvest on ex ante control devices under di�erent costs of ex post scrutiny.10

3.1 Writing coalition agreements and appointing watch-

dog junior ministers

So what will partners do when ex post amending is costly? Will they simplyresign themselves to the unavoidable ministers-as-policy-dictators scenario? Orare there other possible means to try to make partners stick to the agreedpolicies?

It has been widely argued that one of the ex ante mechanisms to avoidagency losses is the contract-desing solution. When a principal wants an agentto do something and wants to avoid the risk of unloyal behavior of the agent, acontract is signed between the two parts where the tasks entrusted to the agentare explicitly written and sanctions for unful�llment may be envisaged. This isa general framework for a PA relationship between two parts.

Coalitions can write contracts likewise, and in fact they do so (some of themmake written coalition agreements public). In these contracts, the bargainingparties in the principal explicitly present the agreed policy agenda that will haveto be delegated to ministers for its implementation. The contents included inthese written agreements do vary widely ranging from o�ce distribution issuesto explicit policy commitments, all through procedural rules laying down theintra-coalitional rules of the game.

Similarly, another ex ante device is the allocation of junior watchdog min-isters to shadow each minister and monitor them from within.11 According toThies (2001: 587), �one way to rein in ministers to oblige them to toe the coali-tion line is to appoint junior ministers as monitors. With access to the goings-onwithin a ministry, JMs have the ability to reduce the minister's informationaladvantage vis-à-vis the rest of the cabinet. If JMs are appointed from di�erentparties than their ministers, they also have the incentive to reveal that infor-mation, at least to their own party leaders�.12 Along the same lines, Verzichelli(2008: 259) states that junior ministers can ful�l the function of keeping tabs onand controlling their partners since �their presence can help reduce informationasymmetries between the party in charge of the respective portfolio and theparty nominating the junior minister�. One may consider that junior ministers

10It has to be said that ex post institutions could also be made endogenous. It could beargued that the alternative to costly ex post amendment could not only be ex ante mechanisms,but also changing the ex post institutions that make it costly. However, legislative institutitonsare taken as exogenous here. In other words, it could be said that the (quite reasonable)assumption underlying the argument presented in this section is that legislative institutionalreform is, at a minimum, more costly than devising ex ante mechanisms of oversight.

11Although some claim that they are ex post institutions, I share Thies' (2001) view andconsider junior ministers ex ante oversight mechanisms.

12Emphasis in the original.

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are irrelevant or redundant since a veto of a ministerial proposal might be issuedin the cabinet table by another party's full minister. �But a veto may make theirown proposals vulnerable to being taken `hostage'. [And i]n contrast to full min-isters, junior ministers are not constrained by the adversarial e�ects a con�ictmay have on their chances of advancing their own departmental initiatives�. Ajunior minister may raise partisan issues with the minister and try to settlethem, and if that is not possible, �they can o�cially inform their party leadersand at the same time speak with greater knowledge than their co-partisans incabinet-level negotiations� (Verzichelli 2008: 260). This is why, just as Thies(2001) does, we are led to expect that the less a minister is constrained by otherinstitutional checks the more junior ministers are a valuable tool for coalitionpartners.

So, if parties are not myopic, and there is every reason to believe so, theywill be able to anticipate the within-cabinet game taking place afterwards andsketched in the previous section. Information about policy positions, and exitand amendment costs can be reasonably gathered by each partner already whenbargaining over formation. As a consequence, when ex post oversight mecha-nisms are more costly, parties in coalitions should have more incentives to investin ex ante devices such as writing a more stringent coalition agreement and/orallocating junior watchdog ministers. This argument where ex post and ex antemechanisms of oversight are traded o� comes from Müller and Strom (2008:183). They claim that although there is no need to see these two mechanismsas mutually exclusive, they can be expected to be at least partial substitutesfor one another because �all governance is costly�.

Thus, the working hypotheses are the following:

Hypothesis 1 The more the cost of ex post legislative amendment of executive

drafts, the more the incentives of parties in coalition governments to

write stringent clauses in their agreements.

Hypothesis 2 The more the cost of ex post legislative amendment of executive

drafts, the more the incentives of parties in coalition governments to

allocate junior watchdog ministers

Additionally, when thinking about the incentives to desing ex ante mechanismsof oversight we can also bring parties' preferences in. As Müller and Strom (2008:166-7) put it, �[i]n some cases, the preferences of the parties may be su�cientlywell aligned that there is no need to negotiate a formal agreement�. Yet, as theyalso acknowledge, �such easy cases are more likely to be exception rather thanthe rule�. As the preference alignment between coalition partners decreases,the consequences of compromise non-observance become certainly more serious.This is what leads these authors to hypothesize that �[t]he greater the preferencediversity among coalition parties, teh more formalized tehir coalition agreementis likely to be�.

Here, I take their argument and explore how it �ts with mine. Since lesscostly ex post mechanisms make deviations less likely, I expect the e�ect ofpreference divergence on the investment in ex ante oversight to be particularly

12

relevant in institutional contexts where ex post legislative amendment is morecostly. This leads to an interactive hypothesis that makes for the third one ofthis work:

Hypothesis 3 The positive e�ect of within-cabinet ideological polarization on the

investment in ex ante oversight mechanisms will be greater as ex post

control is more costly

The predictions to be tested empirically, thus, derive from sort of a two-stagestory. There is a �rst one that happens during formation negotiations thatends with a policy agreement that can contain very di�erent clauses and thatcan be made public or not. In this stage, parties do also allocate portfoliosand watchdog junior ministers (or not). Parties, by anticipating the incentivesthat ministers will face given ex post control institutions in the legislative, actaccordingly and resort di�erently to the clauses of coalition agreements and topartisan institutions within o�ce (junior ministers). In the mentioned secondstage, the game is played as sketched in last section. Put more precisely, themodel presented in the previous section describes the within-cabinet interactionsgiven oversight ex post institutions, had none of the ex ante mechanisms been

envisaged. Coalition parties, so as to keep tabs on partners and avoid contractinobservance, will care more about some ex ante institutions if the ex post onesare such that they would give room to equilibria where the policy agreementwould go unful�lled.

3.2 Data, variables, and method

Since very recently we enjoy data on a number of coalition governance issuesthat has ended up with a series of articles compiled in Strom et al. (2008) (seeBergman et al. (2008) for more details on the data). The observations in thedatabase are West European cabinets from 1945 to 2000. I have run several re-gressions regarding di�erent aspects of coalition agreements and the allocationof watchdog junior ministers using these data. Recall that the �rst hypothesisrefers to the investment in more stringent coalition agreements. In order toapproximate the idea of stringency I consider di�erent measures that could wellaccount for it. They include the mere publication of a written coalition agree-ment, its size, and the importance of procedural rules and policy commitments.Thus, the empirical dependent variables are:

Existence of a Written Coalition Agreement : It captures the likelihood of mak-ing a coalition agreement public. Binary variable where a 0 indicatesthat no contract has been written (and made public) by coalitionpartners, while the opposite is true for 1.

Size of Coalition Agreement in Words: Number of words that the coalition agree-ment has. Continuous variable.

Share of Procedural Rules in the Coalition Agreement : Percentage of words inthe coalition agreement devoted to general cabinet procedural rules.Continuous variable.

13

Procedural Rules in the Coalition Agreement in Words: Number of words in thecoalition agreement devoted to general cabinet procedural rules.Continuous variable.

Share of Policy Speci�c Procedural Rules in the Coalition Agreement : Percentageof words in the coalition agreement devoted to policy-speci�c proce-dural rules. Continuous variable.

Policy Speci�c Procedural Rules in the Coalition Agreement in Words: Numberof words in the coalition agreement devoted to policy-speci�c proce-dural rules. Continuous variable.

Share of Policy Compromises in the Coalition Agreement : Percentage of wordsin the coalition agreement devoted to policy commitments. Contin-uous variable.

Policy Compromises in the Coalition Agreement in Words: Number of words inthe coalition agreement devoted to policy commitments. Continuousvariable.

Allocation of Watchdog Junior Ministers: Inclusion in that cabinet of at leastone junior minister from a party di�erent than that of the minister.Binary variable where a 0 means that they where not allocated while1 indicates the opposite.

The reason why three of the variables are doubled, meaning that they are in-cluded both in relative and absolute numbers, is the following. While the shareof words captures the relative importance given by coalition partners to a cer-tain content of the agreement, it is not independent from words regarding otheraspects. Put di�erently, a coalition could strongly invest in ex ante control rulesin the coalition agreement and still score a low percentage if it also writes muchon other aspects. Nonetheless, since relative numbers are usually a good sourceof information as well, I have decided to `double' the three central variables.

In order to test the hypotheses, I included three di�erent variables measur-ing the strength of ex post legislative oversight institutions and built a fourthone. According to Strom et al. (2006) di�erent institutional settings lead todi�erent levels of parliamentary accountability of cabinet (PAC). Since I wantto capture the costs of amending cabinet ministers' draft bills in the legislativestage, the more the ability of the cabinet to pass its proposals without legislativeinterference, the more di�culty will coalition parties encounter to correct part-ners' ministers deviations from the policy agreement, and vice versa. So, if theydo not �nd it valuable to use the big gun threat (threat of leaving governmentin Timmermans' (2006) terms), the extent to which institutions provide roomfor non-costly amendment of ministers' proposals will matter a lot to controlpartners in coalition goverments. The variables are the following (see Bergmanet al. (2003) for the data used here):

PAC Permanent Committees: Binary variable that takes the value 1 when thereexist legislative review committees on a permanent basis, and 0

14

when in case they are wanted they need to be called ad hoc orthis institution simply does not exist.

PAC Reporting Requirements: Binary variable where 1 indicates that the cab-inet must bring reports on what it is doing on major issues, and 0

when it must not.

PAC Cabinet Minutes' Scrutiny : Binary variable where 1 codes the authorityof parliament to scrutinize cabinet minutes, and 0 otherwise

PAC Additive Index : 4-value variable ranging from 0 to 3 that sums the valuesof three variables above. It is obviously only included when none ofthe former are.

To illustrate why these variables can reasonably capture how cheap/costly arelegislative amendments for cabinet partners in multiparty governments, let meuse the idea behind the �rst variable. While the ability to correct a hypotheticaldeviation of a partner's minister is `by default' where permanent committees ofcabinet oversight exist, they have to be `called' if they only exist on an ad hocbasis. The introduction of changes/corrections/amendments will be clearly lesscostly when the committee task is taken for granted, while if coalition partieswanting to change/correct/amend a partner minister's proposal need to activatean ad hoc amending process, it will be certainly more costly in terms of time,image, etc. Roughly put, the oversight ability for coalition partners is higherand cheaper for coalition partners where committees are powerful.

If all the dependent variables capture the investment in ex ante mechanismsof agents' control (from less to more), I expect the signs of the `PAC' variablesto be negative: the more the (non-costly) availability of ex post institutionaloversight for coalition partners, the less interested they will be in investing in exante mechanisms, and vice versa. A negative association between ex ante andex post oversight is thus expected.

Regarding control variables, the analyses include some cabinet characteris-tics that have been said to in�uence the nature of written coalition agreements(see for instance Müller and Strom (2008) for some of them). Ideological polar-ization is captured by the cabinet preference range in manifesto points in thevariable Cabinet Ideological Polarization. This variable is also used interactivelyto test hypothesis 3. The binary variable Preelectoral Coalition Agreement takesinto account whether (part of) the current multiparty cabinet ran together inelections or not (which entails a preelectoral program that would presumablylower the costs of writing a new coalition agreement). The dummy Mandatory

Screening Program controls for the mandatory requirement of presenting a gov-ernmental screening program at the investiture session (if there is one). Anothervariable tries to capture how far is the status quo policy from the current play-ers' preferences being 1 if the current cabinet includes the same parties as theprevious one and 0 otherwise (Same Cabinet). Max Time Ahead measures themaximum number of days of the cabinet life before the next election, while thepresence/absence of a Core Party (a party holding the dimension-by-dimension

15

median) in cabinet is also included in the regressions. Lastly, since the like-lihood of the theoretical equilibria is crucially shaped by the costs of players'exit option, I have considered the bargaining power of the median party to be agood proxy for the walkaway value of party A (Median Party Walkaway Value).

Finally, the statistical technique used for the �rst and last dependent vari-ables has been a binary logistic regression, whereas OLS linear regressions havebeen used for the rest.

3.3 Results

Tables 1 to 9 o�er the empirical evidence for the dependent variables listedabove. The models in the two left-hand side columns just include traditionalvariables in the explanation of coalition agreements without incorporating thesubstantive independent variables regarding ex post legislative institutions ofoversight (models 1a and 1b). The two models in the central columns are runwith the three substantive independent variables capturing the parliamentaryaccountability of cabinet separately, whereas in the two of the right I includethe additive index (models 2a, 2b and 3a, 3b, respectively). Finally, subscriptsa and b indicate wether the variable re�ecting the exit cost of the median partywas included or not.

[Tables 1 to 9 about here]

Generally speaking, the results o�er partial but satisfactory support to the�rst two hypotheses posed above. A fair deal of the signs associated to the`PAC' variables are negative and reach conventional levels of statistical signi�-cance. However, two things are worth mentioning. First, among the substantiveindependent variables PAC, Permanent Committees is by far the one peform-ing the best. Second, the dependent variables Existence of a Written Coalition

Agreement and Share of Policy Compromises in the Coalition Agreement standout as clear outlayers since the in�uence of legislative review institutions is, ifany, positive.

Regarding the former matter, it seems to demonstrate that it is lackingpermanent committees of legislative oversight what makes coalition partnersespecially worried about investing in ex ante mechanisms in the contract-designphase. This is highly consistent to other studies stressing legislative committeesas crucial tools for coalition governance (e.g. Martin and Vanberg (2004, 2005)or Kim and Loewenberg (2005)). It also seems to disregard cabinet reportingrequirements and cabinet minutes' scrutiny as e�ective oversight institutions,at least from coalition partners' point of view.13

As for the dependent variables, some display the expected �gures and othersdo not. While coalition agreements can be thought to be contracts to avoid

13It has to be said, though, that for the latter variable I had very little variation (less thana 10% of 1 s) and moreover minutes' scrutiny does only exist in contexts where committees arealready strong and reporting practices are also there. This makes it di�cult for this variableto o�er an appreciable marginal e�ect on its own.

16

agency loss ex ante, the very fact of making one public may not mean anythingin particular.

On the other hand, when partners expect the unful�llment of policy commit-ments to be easier/cheaper, they shall be far more interested in devising ex antemechanisms of control rather than writing more policy compromises. In fact,those coalitions that anticipate non-hostile behavior of ministers more likely(i.e. minister's legislative drafts observing the content of the initial compro-mise) might also be interested in writing a coalition agreement making policycompromises public but practically without needing to write down anythingelse. That would be why policy agreements take up a large share of coalitionagreements where institutions make legislative amendment less costly. However,the same does not occur with absolute numbers. Coalition parties in contextswhere legislative amendment is more costly will also be (even more) interested inarriving at policy compromises so as to clearly indicate to their partners whatit needs to be done in others' jurisdictions. Nevertheless, the relative weightof these compromises may go down because they will have to be accompaniedby procedural rules managing the deviations that would appear had they beenabsent. And this is also why in such institutional settings coalition partnersallocate junior watchdog ministers (especi�cally thought to amend ministersproposals even before getting proposed) in parallel with paying more attentionto rules of coalition governance when writing coalition agreements.14

Additionally, although the size of a coalition agreement could mean almostanything (and thus have little theoretical value), the evidence provided heresuggests that it might be a nice summary variable to account for the amount ofinvestment in ex ante oversight made by coalition partners.

As regards hypothesis 3, I have run the complete models above (subscript b)adding the interaction Cabinet Ideological Polarization*Permanent Committees

for the dependent variables Share of Procedural Rules in the Coalition Agreement

and Share of Policy Speci�c Procedural Rules in the Coalition Agreement. Theinteraction with cabinet ideological polarization is done with PAC: Permanent

Committees and not with any other `PAC' variable as the former was the onethat proved to work better in the simple models (tables 1 to 9). Similarly, thedependent variables used are just the mentioned two because they were the moreconsistent theoretically and the empirically most successful in previous tables.15

The new estimates are provided in table 10:

[Table 10 about here]

The negative and statistically signi�cant coe�cients of the interactions cometo support the proposition made above. The e�ect of preference divergence

14It is true that the problems to enforce the policy commitments included in a coalitionagreement could be thought to be similar as those to enforce its procedural rules. However,while it might be clearly easier to escape accusations of policy deviations by resorting toexonerative arguments such as `special circumstances' (or they could be even applauded bytheir own constituency), escaping procedures such as going to this or that summit to resolvea given con�ict might �nd less understanding.

15I ran the interactive models with the dependent variable Allocation of Watchdog Junior

Ministers as well. I do not report the results here since they were statistically not signi�cant.

17

within-cabinet on the investment in ex ante oversight mechanisms is mitigatedby the institutional contexts coalition face. If ex post legislative review mecha-nisms are less costly (i.e. have a permanent basis, here), the fact that coalitionpartners are very far from each other ideologically does not matter as muchas if they required more e�ort (i.e. ad hoc basis, here). This is why in thelatter contexts greater preference diversity makes coalition partners to be espe-cially interested in keeping tabs on each other by designing ex ante oversightmechanisms. To ease readibility, I o�er the next two �gures.

[Figures 1 and 2 about here]

Interestingly enough we see that the more the ideological polarization withincabinet the more the share of the coalition agreement devoted to general andpolicy speci�c procedural rules, but only where legislative review has to be called

ad hoc. Where permanent committees of ex post oversight of ministerial draftsexist, the preference divergence of coalition partners does not increase the in-centives to invest in the design of ex ante control rules. This is what the almostperfectly �at solid lines re�ect. By contrast, the remarkably positive slopes ofthe dashed lines imply that ideological polarization makes partners particularlyworried about designing the appropriate ex ante oversight mechanisms so as toavoid deviations from the compromises reached.

However, notwithstanding all things said, there is something intriguing. In-deed, some claim that the clauses contained in this type of written agreementsare �the bible and nothing but the bible� (De Winter et al. 2000: 332-333).Similarly, Andeweg and Bakema's (1994: 68) state that �[t]he ability of [Dutch]ministers to set policy is seriously constrained by the contents of the govern-ment agreement, which �it should be remembered� is a written �treaty� betweenparliamentary parties on future policies�. But it is not clear why the very factof being written makes the policy agenda to truly constrain ministerial deci-sions. To what extent do written clauses in coalition agreements are just paperstone? In contrast to other contractual relationships, agents' legislative propos-als deviating from the written coalition agreement cannot be sanctioned throughthird-party judicial institutions. Instead, in coalitions the only mechanism forenforcing their written agreements is partners' oversight (along with voters).Thus, if the coalition agreement is not self-enforcing, are we really in any dif-ferent scenario than if compromises were not written? Interesting �ndings havearised in the empirical part showing a positive association between the cost ofinstitutional ex post oversight and the importance of certain characteristics andcontents of coalition agreements. But in order to truly understand why, forinstance, more procedural clauses discipline ministers and make them observethe agreement we should explain why these written rules change the payo�s oftheir parties. And unfortunately that is not very clear so far.

What is for sure, though, is that all the empirical �ndings along with the the-oretical caveats invite to further develop the explanatory models behind them.

18

4 Concluding Remarks

Coalition governments can make decisions in a number of ways, at least the-oretically. At an extreme, coalition partners can completely divide their workand let each of them individually decide policy in their ministerial jurisdictions.At the other extreme, parties sharing o�ce can make use or their veto powergiven by their bargaining strength and produce collectively each decision in eachpolicy dimension (that is, regardless of portfolio allocation). But how can weaccount for this variation?

This paper has provided a theoretical explanation of what is the decision-making game that a coalition government plays using delegation theory. I haveargued that members of multiparty governments do not choose to let each partyset the policy it most prefers in the ministerial jurisdictions it controls. I haveassumed instead that they would like to follow a compromise style of makingpolicy agreed in the formation stage (where policies are decided dimension bydimension in accordance to parties' preferences, bargaining strength, and statusquo). But the problem comes when it is time to execute that policy agenda. Thefact that coalition partners have arrived to an agreement does not make it self-enforcing. In order to make words (either publicly written or not) actual policies,cabinets have to delegate the content of the contract to their agents: ministers.And there is no theoretical need to assume that the contract will be perfectlyabided by them. By contrast, they have the ability to make proposals that pushthe policies they control closer to their ideal points (their parties' ones here).Depending on a number of conditions, an equilibrium has been proved to existwhere �nally deviating ministers' proposals are adopted without amendmentsirrespective of the agenda agreed (i.e. parties specialize in their jurisdictions),and others where the observance of what has been agreed is absolute. Thus,variation in the decision-making models within coalition governments is not theresult of choosing to pick one or another, but of the room ministers �nd to

deviate from a compromise style of policy-making. And this variation arises asa consequence of delegation problems that can be more or less severe depending,among others, on the costs of legislative review and amendment.

However, I have argued that coalition partners could avoid that ministers-as-policy-dictators fate and lift a �nger to change it. By thinking in terms ofex ante and ex post oversight institutions, in the second part of the paper Ihave claimed that the more the cost of legislative amendment given by currentinstitutions, the more will coalition parties be interested in investing in ex anteoversight mechanisms. I have showed empirically that this interest in ex anteoversight institutions is re�ected in the relative importance given to severalaspects contained in written coalition agreements such as procedural rules, andin the likelihood of allocating junior watchdog ministers. Finally, the inclusionof interactive variables has evidenced that ex post legislative review institutionsshape the e�ect of cabinet ideological polarization on the investment in ex anteoversight made by coalition partners.

Timmermans (2006: 281) claims that �[t]he formation and termination ofgovernment coalitions across countries have been theorized and analyzed exten-

19

sively. The key research subject ahead is what happens between�. This paperhas examined how do the policy-making dynamics of a coalition cabinet a�ectsthe way partners in o�ce try to keep tabs on each other. Although much moreremains to be done, this work has tried to take a step forward on the key researchsubject ahead that will need to be continued in the future.

References

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[24] Lupia, Arthur, and Mathew D. McCubbins. 1994b. "Who Controls? In-formation and the Structure of Legislative Decision Making." LegislativeStudies Quarterly 19(3): 361-84.

[25] Lupia, Arthur, and Kaare Strom. 2008. "Bargaining, Transaction Costs,and Coalition Governance." In Cabinets and Coalition Bargaining: TheDemocractic Life Cycle in Western Europe, ed. Kaare Strom, Wolfgang C.Müller, and Torbjorn Bergman. New York: Oxford University Press.

[26] Lyne, Mona, and Michael Tierney. 2003. "The Politics of Common Agency:Unitary, Multiple and Collective Principals.". Paper presented at the an-nual meeting of the American Political Science Association, PhiladelphiaMarriott Hotel, Philadelphia, PA.

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[28] Martin, Lanny W., and Georg Vanberg. 2005. "Coalition Policymaking andLegislative Review." American Political Science Review 99(1): 93-106.

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23

Tables and Figures

Figure 1: Coalition Policy-Making in an Extensive Form Game

24

Table1:Existence

ofaWritten

CoalitionAgreem

ent(LogisticRegression)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

-0.133

-0.221

-0.043

-0.269

0.044

-0.098

[0.327]

[0.330]

[0.358]

[0.371]

[0.347]

[0.357]

MaxTim

eAhead(D

ays)

0.000

0.000

0.001

0.001*

0.000

0.001

[0.000]

[0.000]

[0.000]

[0.000]

[0.000]

[0.000]

Core

Party

-1.585**

-1.442**

-1.292**

-1.041**

-1.654**

-1.552**

[0.310]

[0.319]

[0.373]

[0.396]

[0.344]

[0.363]

Cabinet

IdeologicalPolarization

-0.002

-0.003

-0.002

-0.005

-0.002

-0.004

[0.007]

[0.007]

[0.008]

[0.008]

[0.008]

[0.008]

Mandatory

ScreeningProgram

0.500

0.679

0.842

1.339**

0.414

0.574

[0.430]

[0.439]

[0.476]

[0.518]

[0.448]

[0.460]

MedianPartyWalkawayValue

-2.268**

-4.529**

-3.486**

[0.776]

[1.110]

[0.933]

PAC:PermanentCommittees

0.801

0.849

[0.467]

[0.474]

PAC:ReportingRequirem

ents

1.879**

2.503**

[0.390]

[0.463]

PAC:AdditiveIndex

1.609**

1.892**

[0.351]

[0.384]

Constant

1.056*

1.712**

-1.377

-0.625

-1.542*

-0.862

[0.473]

[0.539]

[0.738]

[0.792]

[0.724]

[0.768]

Observations

232

232

221

221

227

227

PseudoR-squared

0.119

0.172

0.217

0.283

0.210

0.272

**p<0.01*p<0.05

Standard

errors

inbrackets

25

Table2:SizeofCoalitionAgreementin

Words(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

1335.138

1357.913

-276.506

-612.138

1320.700

1377.390

[1442.368]

[1447.553]

[1482.753]

[1447.290]

[1506.000]

[1510.987]

MaxTim

eAhead(D

ays)

2.377

2.409

1.534

1.624

2.395

2.448

[1.549]

[1.556]

[1.724]

[1.677]

[1.790]

[1.795]

Core

Party

-2022.536

-1904.169

168.593

1392.717

-2381.970

-2255.617

[1473.682]

[1500.815]

[1609.434]

[1624.515]

[1555.393]

[1568.309]

Cabinet

IdeologicalPolarization

-64.943*

-66.411*

-48.251

-51.730

-64.910*

-66.829*

[29.101]

[29.366]

[29.028]

[28.265]

[30.305]

[30.481]

PreelectoralCoalitionAgreement

4731.511*

4801.676*

5134.385*

6553.420**

5586.047*

5889.149*

[2056.287]

[2068.201]

[2319.216]

[2311.367]

[2381.130]

[2422.782]

Mandatory

ScreeningProgram

9505.180**

9576.034**

12438.428**

13851.512**

9288.850**

9390.974**

[1743.799]

[1755.940]

[1883.218]

[1899.056]

[1811.575]

[1820.652]

MedianPartyWalkawayValue

-2033.706

-14280.813**

-3507.892

[4469.765]

[5056.045]

[4883.503]

PAC:PermanentCommittees

-6109.687**

-7988.411**

[1923.384]

[1985.757]

PAC:ReportingRequirem

ents

1637.968

2593.274

[1628.396]

[1619.788]

PAC:Cabinet

Minutes'

Scrutiny

3976.197

3602.122

[2644.761]

[2576.197]

PAC:AdditiveIndex

-22.168

-90.927

[1137.165]

[1143.387]

Constant

3788.780

4302.558

6855.867

10964.837**

3960.147

4930.320

[2135.173]

[2421.034]

[3481.595]

[3686.067]

[3356.859]

[3624.430]

Observations

140

140

133

133

133

133

R-squared

0.292

0.293

0.378

0.417

0.295

0.298

**p<0.01*p<0.05

Standard

errors

inbrackets

26

Table3:ProceduralRulesin

theCoalitionAgreem

entin

Percentage(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

6.931**

6.725**

5.101**

5.455**

6.867**

6.528**

[1.746]

[1.676]

[1.818]

[1.790]

[1.821]

[1.736]

MaxTim

eAhead(D

ays)

0.000

0.000

-0.001

-0.001

-0.001

-0.001

[0.002]

[0.002]

[0.002]

[0.002]

[0.002]

[0.002]

Core

Party

2.751

1.680

5.248**

3.957

2.807

2.051

[1.784]

[1.737]

[1.974]

[2.009]

[1.881]

[1.802]

Cabinet

IdeologicalPolarization

0.041

0.054

0.060

0.064

0.045

0.056

[0.035]

[0.034]

[0.036]

[0.035]

[0.037]

[0.035]

PreelectoralCoalitionAgreement

-4.462

-5.097*

-3.222

-4.719

-3.394

-5.206

[2.490]

[2.394]

[2.844]

[2.858]

[2.879]

[2.783]

Mandatory

ScreeningProgram

0.253

-0.388

3.139

1.649

-0.111

-0.721

[2.111]

[2.033]

[2.309]

[2.348]

[2.191]

[2.091]

MedianPartyWalkawayValue

18.396**

15.057*

20.970**

[5.174]

[6.253]

[5.610]

PAC:PermanentCommittees

-7.226**

-5.245*

[2.359]

[2.456]

PAC:ReportingRequirem

ents

1.508

0.500

[1.997]

[2.003]

PAC:Cabinet

Minutes'

Scrutiny

-0.104

0.290

[3.243]

[3.186]

PAC:AdditiveIndex

-1.585

-1.174

[1.375]

[1.313]

Constant

-0.226

-4.873

4.786

0.454

3.272

-2.528

[2.585]

[2.802]

[4.269]

[4.558]

[4.059]

[4.163]

Observations

140

140

133

133

133

133

R-squared

0.131

0.207

0.217

0.253

0.137

0.225

**p<0.01*p<0.05

Standard

errors

inbrackets

27

Table4:ProceduralRulesin

theCoalitionAgreem

entin

Words(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

147.237**

141.682**

88.665

97.467

142.220**

133.133*

[51.861]

[50.177]

[53.675]

[53.199]

[53.935]

[51.926]

MaxTim

eAhead(D

ays)

0.038

0.031

-0.022

-0.025

0.002

-0.007

[0.056]

[0.054]

[0.062]

[0.062]

[0.064]

[0.062]

Core

Party

40.490

11.620

122.043*

89.942

41.608

21.354

[52.987]

[52.023]

[58.260]

[59.713]

[55.704]

[53.896]

Cabinet

IdeologicalPolarization

0.515

0.873

1.144

1.235

0.626

0.934

[1.046]

[1.018]

[1.051]

[1.039]

[1.085]

[1.048]

PreelectoralCoalitionAgreement

-159.749*

-176.862*

-130.312

-167.525

-124.186

-172.772*

[73.935]

[71.690]

[83.954]

[84.960]

[85.276]

[83.261]

Mandatory

ScreeningProgram

126.068*

108.787

215.773**

178.717*

113.289

96.919

[62.699]

[60.866]

[68.171]

[69.805]

[64.879]

[62.568]

MedianPartyWalkawayValue

496.026**

374.494*

562.302**

[154.936]

[185.847]

[167.826]

PAC:PermanentCommittees

-248.753**

-199.486**

[69.625]

[72.991]

PAC:ReportingRequirem

ents

13.290

-11.762

[58.947]

[59.539]

PAC:Cabinet

Minutes'

Scrutiny

35.314

45.123

[95.739]

[94.694]

PAC:AdditiveIndex

-59.261

-48.239

[40.726]

[39.294]

Constant

2.790

-122.521

208.312

100.560

133.876

-21.639

[76.771]

[83.920]

[126.031]

[135.491]

[120.220]

[124.557]

Observations

140

140

133

133

133

133

R-squared

0.110

0.174

0.206

0.232

0.119

0.192

**p<0.01*p<0.05

Standard

errors

inbrackets

28

Table5:Policy-Speci�cProceduralRulesin

theCoalition

Agreem

entin

Percentage(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

5.256**

5.209**

4.056**

4.048**

5.076**

5.012**

[1.390]

[1.391]

[1.415]

[1.426]

[1.420]

[1.424]

MaxTim

eAhead(D

ays)

0.002

0.002

-0.000

-0.000

0.001

0.001

[0.001]

[0.001]

[0.002]

[0.002]

[0.002]

[0.002]

Core

Party

0.741

0.492

2.858

2.887

0.693

0.551

[1.420]

[1.442]

[1.536]

[1.600]

[1.467]

[1.478]

Cabinet

IdeologicalPolarization

0.032

0.036

0.054

0.054

0.039

0.042

[0.028]

[0.028]

[0.028]

[0.028]

[0.029]

[0.029]

PreelectoralCoalitionAgreement

-4.109*

-4.256*

-3.389

-3.355

-2.149

-2.488

[1.982]

[1.987]

[2.213]

[2.277]

[2.246]

[2.283]

Mandatory

ScreeningProgram

1.785

1.636

3.539

3.573

1.199

1.084

[1.681]

[1.687]

[1.797]

[1.871]

[1.708]

[1.715]

MedianPartyWalkawayValue

4.276

-0.343

3.928

[4.295]

[4.980]

[4.601]

PAC:PermanentCommittees

-8.161**

-8.206**

[1.836]

[1.956]

PAC:ReportingRequirem

ents

-3.454*

-3.431*

[1.554]

[1.596]

PAC:Cabinet

Minutes'

Scrutiny

3.992

3.983

[2.524]

[2.538]

PAC:AdditiveIndex

-2.731*

-2.654*

[1.072]

[1.077]

Constant

-1.525

-2.605

8.483*

8.581*

4.241

3.155

[2.058]

[2.326]

[3.323]

[3.631]

[3.166]

[3.415]

Observations

140

140

133

133

133

133

R-squared

0.143

0.150

0.259

0.259

0.180

0.185

**p<0.01*p<0.05

Standard

errors

inbrackets

29

Table6:Policy-Speci�cProceduralRulesin

theCoalitionAgreem

entin

Words(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

43.352

42.890

11.942

11.242

29.159

29.203

[82.594]

[82.947]

[86.787]

[87.433]

[85.365]

[85.826]

MaxTim

eAhead(D

ays)

0.086

0.085

-0.038

-0.038

0.012

0.012

[0.089]

[0.089]

[0.101]

[0.101]

[0.101]

[0.102]

Core

Party

-109.515

-111.921

-43.608

-41.055

-116.085

-115.986

[84.387]

[85.999]

[94.201]

[98.140]

[88.165]

[89.082]

Cabinet

IdeologicalPolarization

1.028

1.058

1.812

1.805

1.269

1.268

[1.666]

[1.683]

[1.699]

[1.708]

[1.718]

[1.731]

PreelectoralCoalitionAgreement

-161.210

-162.636

-158.687

-155.727

-74.079

-73.843

[117.748]

[118.512]

[135.745]

[139.634]

[134.971]

[137.617]

Mandatory

ScreeningProgram

521.505**

520.065**

555.441**

558.388**

493.869**

493.948**

[99.854]

[100.619]

[110.226]

[114.725]

[102.686]

[103.415]

MedianPartyWalkawayValue

41.325

-29.782

-2.732

[256.126]

[305.444]

[277.389]

PAC:PermanentCommittees

-320.356**

-324.274**

[112.577]

[119.963]

PAC:ReportingRequirem

ents

-256.813**

-254.821*

[95.311]

[97.854]

PAC:Cabinet

Minutes'

Scrutiny

266.920

266.140

[154.800]

[155.632]

PAC:AdditiveIndex

-125.400

+-125.454

+

[64.458]

[64.946]

Constant

13.283

2.843

520.423*

528.992*

288.843

289.598

[122.266]

[138.730]

[203.780]

[222.682]

[190.278]

[205.872]

Observations

140

140

133

133

133

133

R-squared

0.199

0.199

0.264

0.264

0.217

0.217

**p<0.01*p<0.05

+p<0.1

Standard

errors

inbrackets

30

Table7:Policy

Com

promises

intheCoalitionAgreem

entin

Percentage(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

-19.601**

-19.231**

-15.086**

-15.526**

-19.278**

-18.712**

[3.919]

[3.824]

[3.968]

[3.968]

[4.023]

[3.926]

MaxTim

eAhead(D

ays)

-0.003

-0.003

0.003

0.003

0.001

0.001

[0.004]

[0.004]

[0.005]

[0.005]

[0.005]

[0.005]

Core

Party

-1.668

0.255

-8.232

-6.628

-1.482

-0.221

[4.004]

[3.965]

[4.307]

[4.454]

[4.155]

[4.075]

Cabinet

IdeologicalPolarization

-0.108

-0.132

-0.170*

-0.175*

-0.126

-0.145

[0.079]

[0.078]

[0.078]

[0.077]

[0.081]

[0.079]

PreelectoralCoalitionAgreement

11.224*

12.364*

7.351

9.210

6.068

9.094

[5.587]

[5.464]

[6.206]

[6.337]

[6.361]

[6.295]

Mandatory

ScreeningProgram

-0.467

0.684

-7.246

-5.394

1.054

2.074

[4.738]

[4.639]

[5.040]

[5.207]

[4.839]

[4.731]

MedianPartyWalkawayValue

-33.042**

-18.713

-35.024**

[11.809]

[13.863]

[12.689]

PAC:PermanentCommittees

23.001**

20.539**

[5.147]

[5.445]

PAC:ReportingRequirem

ents

2.690

3.942

[4.358]

[4.441]

PAC:Cabinet

Minutes'

Scrutiny

-4.056

-4.546

[7.078]

[7.063]

PAC:AdditiveIndex

6.865*

6.178*

[3.038]

[2.971]

Constant

102.340**

110.688**

79.852**

85.237**

87.698**

97.384**

[5.801]

[6.396]

[9.317]

[10.107]

[8.967]

[9.417]

Observations

140

140

133

133

133

133

R-squared

0.184

0.230

0.303

0.313

0.213

0.258

**p<0.01*p<0.05

Standard

errors

inbrackets

31

Table8:Policy

Compromises

intheCoalitionAgreem

entin

Words(O

LSRegressionAnalysis)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

959.595

992.060

-493.741

-838.046

972.433

1043.308

[1411.487]

[1415.314]

[1463.618]

[1424.868]

[1473.613]

[1476.545]

MaxTim

eAhead(D

ays)

2.187

2.233

1.618

1.711

2.376

2.443

[1.516]

[1.521]

[1.702]

[1.651]

[1.751]

[1.754]

Core

Party

-1857.359

-1688.630

103.082

1358.838

-2203.035

-2045.066

[1442.130]

[1467.390]

[1588.664]

[1599.348]

[1521.944]

[1532.561]

Cabinet

IdeologicalPolarization

-65.993*

-68.086*

-51.525

-55.094*

-66.533*

-68.934*

[28.478]

[28.712]

[28.653]

[27.827]

[29.653]

[29.787]

PreelectoralCoalitionAgreement

5185.447*

5285.465**

5485.127*

6940.831**

5837.335*

6216.281**

[2012.261]

[2022.140]

[2289.286]

[2275.559]

[2329.922]

[2367.557]

Mandatory

ScreeningProgram

8877.394**

8978.394**

11595.191**

13044.791**

8725.616**

8853.293**

[1706.464]

[1716.833]

[1858.915]

[1869.635]

[1772.616]

[1779.152]

MedianPartyWalkawayValue

-2898.972

-14649.839**

-4385.651

[4370.217]

[4977.716]

[4772.188]

PAC:PermanentCommittees

-5221.095**

-7148.366**

[1898.562]

[1954.993]

PAC:ReportingRequirem

ents

1906.585

2886.576

[1607.381]

[1594.694]

PAC:Cabinet

Minutes'

Scrutiny

3662.857

3279.116

[2610.629]

[2536.286]

PAC:AdditiveIndex

265.800

179.836

[1112.710]

[1117.325]

Constant

3737.161

4469.531

5776.782

9991.930**

3275.422

4488.356

[2089.459]

[2367.114]

[3436.664]

[3628.962]

[3284.668]

[3541.814]

Observations

140

140

133

133

133

133

R-squared

0.285

0.288

0.362

0.405

0.290

0.295

**p<0.01*p<0.05

Standard

errors

inbrackets

32

Table9:AllocationofWatchdogJuniorMinisters

(LogisticRegression)

NoExpost

Instit.

Expost

Instit.(3)

Expost

Instit.(Index)

Model1a

Model1b

Model2a

Model2b

Model3a

Model3b

SameCabinet

0.547

0.620*

0.391

0.493

0.473

0.544

[0.289]

[0.293]

[0.307]

[0.315]

[0.299]

[0.306]

MaxTim

eAhead(D

ays)

0.000

0.000

0.000

0.000

0.000

0.000

[0.000]

[0.000]

[0.000]

[0.000]

[0.000]

[0.000]

Core

Party

0.503

0.319

0.747*

0.466

0.254

0.045

[0.279]

[0.290]

[0.339]

[0.351]

[0.294]

[0.306]

Cabinet

IdeologicalPolarization

-0.002

-0.001

-0.003

-0.001

-0.003

-0.002

[0.006]

[0.006]

[0.007]

[0.007]

[0.006]

[0.007]

PreelectoralCoalitionAgreement

0.565

0.696

0.976

1.086

1.494*

1.679*

[0.517]

[0.527]

[0.653]

[0.663]

[0.652]

[0.677]

Mandatory

ScreeningProgram

0.137

-0.005

0.605

0.407

0.080

-0.081

[0.334]

[0.342]

[0.387]

[0.394]

[0.343]

[0.353]

MedianPartyWalkawayValue

2.032**

2.227**

2.370**

[0.706]

[0.748]

[0.741]

PAC:PermanentCommittees

-1.999**

-1.954**

[0.444]

[0.438]

PAC:ReportingRequirem

ents

-0.746*

-0.897**

[0.324]

[0.333]

PAC:Cabinet

Minutes'

Scrutiny

0.698

0.804

[0.750]

[0.770]

PAC:AdditiveIndex

-0.832**

-0.911**

[0.242]

[0.247]

Constant

-0.678

-1.267**

1.321*

0.755

0.836

0.287

[0.421]

[0.481]

[0.638]

[0.670]

[0.586]

[0.624]

Observations

253

253

246

246

246

246

PseudoR-squared

**p<0.01*p<0.05

Standard

errors

inbrackets

33

Table10:ProceduralRules(G

eneralandPolicy-speci�c)

intheCA

(OLSwithinteractions)

GeneralProc.

Rules

Policy-Spec.Proc.

Rules

ModelA1a

ModelA1b

ModelA2a

ModelA2b

SameCabinet

5.455**

4.323*

4.048**

3.073*

[1.790]

[1.701]

[1.426]

[1.338]

MaxTim

eAhead(D

ays)

-0.001

-0.000

-0.000

0.001

[0.002]

[0.002]

[0.002]

[0.002]

Core

Party

3.957

2.803

2.887

1.893

[2.009]

[1.905]

[1.600]

[1.498]

Cabinet

IdeologicalPolarization

0.064

0.447**

0.054

0.384**

[0.035]

[0.097]

[0.028]

[0.076]

PreelectoralCoalitionAgreement

-4.719

-4.443

-3.355

-3.118

[2.858]

[2.682]

[2.277]

[2.110]

Mandatory

ScreeningProgram

1.649

1.009

3.573

3.022

[2.348]

[2.209]

[1.871]

[1.737]

MedianPartyWalkawayValue

15.057*

17.242**

-0.343

1.541

[6.253]

[5.889]

[4.980]

[4.632]

PAC:PermanentCommittees

-5.245*

7.604*

-8.206**

2.867

[2.456]

[3.832]

[1.956]

[3.014]

PAC:ReportingRequirem

ents

0.500

1.170

-3.431*

-2.854

[2.003]

[1.886]

[1.596]

[1.484]

PAC:Cabinet

Minutes'

Scrutiny

0.290

-0.653

3.983

3.170

[3.186]

[2.997]

[2.538]

[2.358]

Cabinet

IdeologicalPolarization*PermanentCommittees

-0.436**

-0.376**

[0.104]

[0.082]

Constant

0.454

-12.117*

8.581*

-2.252

[4.558]

[5.222]

[3.631]

[4.107]

Observations

133

133

133

133

R-squared

0.253

0.348

0.259

0.369

**p<0.01*p<0.05

Standard

errors

inbrackets

34

Figure 2: Interaction Cabinet Ideological Polarization * Committee System(General Procedural Rules)

Figure 3: Interaction Cabinet Ideological Polarization * Committee System(Policy-Speci�c Procedural Rules)

35

Appendix

Table 11: Equilibria solved by backwards induction

Compromise Policy-Making (Centralized)(a, f ; o : KA > (1 + δ)XA − (2 + δ)XC +XQ

)Compromise Policy-Making (Centralized)(

a, c ; o : KA < (1 + δ)XA − (2 + δ)XC +XQ KB < XA −XB E > (1− δ)XB − (2− δ)XC +KB)

Compromise Policy-Making (Centralized)(a, c ; l : KA < (1 + δ)XA − (2 + δ)XC +XQ E <

{(1− δ)XB − (2− δ)XC +XQ +KB

(1− δ)XB − (2− δ)XC +XA

)

Ministerial Policy-Making (Decentralized, Specialization)(a, c ; o : KA < (1 + δ)XA − (2 + δ)XC +XQ KB > XA −XQ E > (1− δ)XB − (2− δ)XC +XA

)

36