In this paper we present a game-theoretical model of political decision-making which takes into account actors' embeddedness in social networks. We first present a general framework of political decision-making which consists of two components: a) an institutional arena where political decisions are made by political agents according to their political preferences along a fixed institutional procedure and b) a social system where political actors try to influence political preferences of agents in order to maximize their utilities. We argue that these two arenas are interconnected and therefore should be modeled simultaneously. For this purpose we then introduce a policy game based on Harsanyi´s general N-person bargaining game. Given this theoretical framework we are able to derive meaningful hypotheses regarding the impact of communication networks on policy outcomes. In order to test these hypotheses we use empirical network data to develop and compute quantity indices corresponding to the actor's position in communication networks, which we interpret as the actor's political capital. Our data based on local government decision-making regarding cutbacks of public and private service agencies in the social and health sector. The econometrical tests support our main hypothesis the greater the amount of political capital of an organization the less it will be cut back.
