Characterization of the von Neumann-Morgenstern stable set in a non-cooperative model of dynamic policy-making with a persistent agenda setter

We generalize the dynamic bargaining game of Diermeier and Fong (2011) to arbitrary quota rules to provide a non-cooperative characterization of the von Neumann-Morgenstern stable set. Assuming that players are sufficiently patient and have strict preferences, a pure-strategy stationary equilibrium exists and in any such equilibrium, a policy is a steady state if and only if it is in the stable set. The result provides a non-cooperative foundation of stable sets in settings with dynamic policy-making and a persistent agenda setter.