Entitlement to assort: Democracy, compromise culture and economic stability

We propose a simple model to support Rodrik's (2000) conjecture that democracy lowers economic instability through breeding compromise culture. In the model, a population of compromisers and opportunists collectively bargain over the assortativity level of matching through a democratic political institution. We show that compromisers are able to achieve a positive level of assortativity which helps them to avoid matching with opportunists. This in turn raises compromisers' payoffs above opportunists' and eventually compromisers dominate the population through cultural evolution.