Stable coalition governments: the case of three political parties

We explore to what extent we can propose fixed negotiation rules and simple mechanisms (or protocols) that guarantee that political parties can form stable coalition governments. We analyze the case in which three parties can hold office in the form of two-party coalitions. We define a family of weighted rules that select political agreements as a function of the bliss points of the parties and electoral results (Gamson’s law and equal share among others are included). We show that every weighted rule yields a stable coalition. We use implementation theory to design a protocol (in the form of a mechanism) that guarantees that a stable coalition will govern. We find that no dominant solvable mechanism can be used for this purpose, but there is a simultaneous unanimity mechanism that implements it in Nash and strong Nash equilibrium. Finally, we analyze the case of a larger number of political parties.