Shutdown as Strategy: A Repeated Game Model of Government Shutdowns with Audience Costs and Credible Commitment Problems

Government shutdowns impose enormous costs on the economy and on federal workers, and yet they keep happening, and they keep getting longer. Why? The existing literature treats shutdowns as either a byproduct of legislative gridlock or a symptom of partisan polarization, but neither account explains why rational political actors repeatedly choose an outcome that nobody wants. This paper argues that shutdowns are not bargaining failures but strategic equilibrium outcomes, sustained by the political cost of being seen to back down. I model government shutdown as a repeated Chicken game between Democrats and Republicans with three parameters: the policy benefit of winning (B), the cost of the shutdown itself (S), and the audience cost a leader pays for conceding after a public commitment (L), the political penalty for being the one who concedes. When L exceeds S, holding firm dominates conceding for both sides, and the mutual-shutdown outcome becomes the equilibrium. Because shutdown costs accumulate over time, duration depends not only on how high L is but on how quickly S(t) rises to meet it. Across repeated rounds, each concession compounds the reputational cost of conceding in the next round, producing a ratchet effect. I test the model against six cases, the 1978, 1995–96, 2013, 2018–19, and 2025 shutdowns, plus the 2011 near-shutdown, using process tracing and structured comparison. The findings suggest that ending the shutdown cycle requires reforms that change the payoff structure itself. As raising shutdown costs for the legislators who choose them or lowering audience costs by removing the shutdown as a reversion point. Reducing polarization alone will not be enough.