How do coalition parties allocate payoffs? Political parties forming a coalition government join forces for the purpose of entering government, but they pursue different policy objectives and compete for offices. While the literature on coalition governments has devoted considerable attention to predicting the allocation of ministerial portfolios, the distribution of policy payoffs has largely been neglected. We argue that coalition negotiations have to be conceptualized as a two-dimensional process in which parties simultaneously bargain about the allocation of policy benefits and ministerial portfolios. More specifically, we expect that policy and office payoffs are traded so that policy gains could be exchanged for a specific office and vice versa. We will empirically test our theoretical expectations by compiling a novel dataset on policy payoff allocation that is based on a content analysis of coalition agreements negotiated by 230 multiparty cabinets in 24 West and East European countries and by combining this new dataset with information on cabinet and party characteristics. Our results will have major implications for our understanding of coalition governments and policy-making in multiparty systems.
