The ultimate outcome of the 2025 Bundestag election has yielded a coalition environment that is dominated bilaterally by CDU/CSU and SPD. Looking at the results of the elections, CDU/CSU is in the forefront with 208 seats (28.52%), followed by AfD with 152 seats (20.8%), SPD with 120 seats (16.41%), and the Greens with 85 seats (11.61%). Die Linke garnered 64 seats (8.77%), and SSW has only one seat (0.15%). Notably, BSW (4.97%) and FDP (4.33%) failed to gain representation in the Bundestag. This means that CDU/CSU and SPD are the sole potential coalition partners under these results, with a total of 328 seats, enough to form a government. By this, it is a two-player coalition bargaining game, and bargaining strength must be based on interdependency, not simply the count of seats.

Bundestag 2025 Election Results

Bilateral Monopoly and the Core: An Examination of the CDU/CSU’s inability to Dominate

In cooperative game theory, the formation of coalitions relies on the core, which is a collection of stable imputations in which no coalition of players will have the incentive to deviate. Since CDU/CSU + Greens can’t pass the minimum and CDU/CSU + AFD is simply politically not possible, the CDU/CSU and the SPD are the sole coalition possibility, their coalition is in the core, and no other rival coalition can credibly pose a takeover threat. If BSW and/or FDP would have made it to the minimum of 5%, multiple coalitions were possible, but in the current situation, there is no alternative for both parties, resulting in a bilateral monopoly in the classical sense. While the CDU/CSU has more seats, the intrinsic value of the SPD neutralizes this and makes both parties equally powerful when negotiating. This fact is consistent with Nash bargaining theory, which argues that the lack of alternatives pressures each party to make concessions in a bid to reach an agreement. 

The SPD has an equal Shapley value to the CDU/CSU despite its fewer seats because their marginal contributions towards coalition stability are inseparable - both parties are equally necessary to exceed the 316-seat majority threshold. 

In multi-player bargaining, Shapley value of a player is calculated taking into account their value in every potential coalition; in the scenario presented though, as just one such viable coalition can be formed, both players are of equal strategic significance. From the perspective of Rubinstein bargaining theory, delay in negotiations costs both sides. Though the CDU/CSU has a higher number of votes, their inability to govern without the SPD puts them in a weak position time-wise. The SPD is able to leverage this and negotiate for more policy concessions - such as attaining important ministerial posts or shaping economic and social policies in their favor. In a standard bargaining game with alternatives, CDU/CSU could use other parties as an outside option to threaten SPD, but with no external options available, SPD has the same bargaining power when negotiating.

What If? Alternative Scenarios and Their Impact on Coalition Stability

Had BSW been admitted to the Bundestag and FDP remained outside, the left coalition (SPD, Greens, and BSW) would have had 269 members - still short of a majority. This, however, would have given SPD the bargaining power to threaten to form a left-leaning coalition, even an unstable one, giving them a better fall-back option. In cooperative game theory, this would have been a case where the core would have been expanded to include multiple stable coalitions with diverse Shapley value distributions. The SPD might have increased its bargaining power by positioning itself as the “swing player” in a position to negotiate with either the CDU/CSU or the Greens-BSW alliance. However, the ideological differences within this left coalition may have led to internal instability, making it a less cohesive bargaining unit. If FDP and BSW had also won seats, the coalition-building process would have been much more complicated, altering bargaining power ratios and negotiation dynamics. The Union + SPD combination (293 seats) would no longer be enough to secure a majority, forcing CDU/CSU and SPD to include either the Greens (for a 378-seat majority) or FDP (for a 326-seat majority). The change in coalition options fundamentally alters the political calculus, placing minor parties - such as the FDP, the Greens, and BSW - in the crucial contributor position instead of the ancillary participant position. Their bargaining power significantly improves, as they now possess the decisive capability to create a government, thereby rendering them kingmakers instead of subordinate allies.

Coalition Options for Bundestag 2025

In a game theory context, this expansion of coalition opportunities reshuffles power. Considering the Shapley value, CDU/CSU and SPD no longer hold exclusive control, but the FDP, BSW, and Greens have a say in various potential winning coalitions, and their policy-making and ministerial appointment influence rises. The 326-seat Union, SPD, FDP coalition would provide a more balanced and pragmatic majority, where negotiations among centrist forces are easier.

Conversely, the Union + SPD + Greens (378 seats) coalition would be the most stable but ideologically complicated, with more profound differences on economic and social policy. Bargaining set theory states that a larger coalition space means more possible agreements but also makes conflict more likely and coalition management harder. At the heart of this situation lies the issue of who holds power in the negotiating table. The CDU/CSU wields great power without the FDP and BSW, forcing the SPD and the Greens into an inferior negotiating position. When FDP and BSW are added, the equation changes, the Union loses some of its dominance, as it can no longer dictate terms freely. 

Game theory forecasts more options mean more competition, making the negotiations more complex, messy, and less predictable. The most practical outcome would be the Union + SPD + FDP coalition (326 seats), a majority without excessive instability. But in the event of deadlock, the Union + SPD + Greens coalition (378 seats) would be the safest fall-back option, highlighting the degree to which FDP and BSW representation would have altered the process of coalition-building.

However, because neither FDP nor BSW was involved, the current two-player situation precludes any possibility of strategic maneuvering, forcing CDU/CSU and SPD to negotiate on an equal footing.

The Limitations of a Two-Player Coalition Game

As opposed to previous elections, where coalition bargaining was a multi-party game, the 2025 Bundestag election has reduced bargaining to a bilateral monopoly, where CDU/CSU and SPD must come to an agreement, or there can be no government. Despite CDU/CSU’s numerical majority, SPD’s indispensability reduces the situation to an equal power-sharing arrangement, according to Shapley value theory. With no alternatives, both parties are locked in negotiations where neither side can afford to walk away from the table.

Had FDP or BSW won entry into the Bundestag, bargaining would have been more competitive and yielded a number of alternative power-sharing combinations. This would have expanded the core, increased strategic flexibility, and shifted bargaining influence toward the largest party with the most coalition options - in this case, CDU/CSU. As it stands, the situation eliminates bargaining complexity but enhances the CDU/CSU-SPD tug-of-war for power, as neither is in a position to dominate the negotiations.

In terms of game theory, this election represents a peculiar example of bilateral monopoly coalition, where bargaining strength is not based on numbers of seats, but on sheer necessity. The absence of smaller parties removes strategic flexibility, forcing CDU/CSU and SPD into a power-sharing agreement where the only real debate is how much each side can extract before conceding.