In bargaining theory, a “disagreement point” or “threat point” is the policy which is implemented if no agreement is reached. Typically, it is bad for both sides, but may be worse for one. The disagreement point has a profound impact on the outcome of negotiations, even if it never comes to pass. (In theory-land, say in Nash or Rubinstein bargaining, there is never disagreement, but the threat of disagreement is a crucial determinant of the outcome.)


Obviously, in our government’s current situation, the disagreement point is a shutdown. TV pundits have been speculating for weeks about which side this hurts more. But this isn’t the only imaginable disagreement point. The system could decree that, say, last year’s budget gets extended automatically if no new budget is passed. This would drastically impact the negotiations (favoring the Democrats in this particular case.) My question to anyone who knows the history of government better than I do is: How did we come to have a system where the government shuts down unless a new budget is passed each year? And do other countries differ on this point?