Rhetoric in legislative bargaining with asymmetric information

Ying Chen, Hülya Eraslan

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)

Abstract

We analyze a three-player legislative bargaining game over an ideological and a distributive decision. Legislators are privately informed about their ideological intensities, i.e., the weight placed on the ideological decision relative to the weight placed on the distributive decision. Communication takes place before a proposal is offered and majority rule voting determines the outcome. We show that it is not possible for all legislators to communicate informatively. In particular, the legislator who is ideologically more distant from the proposer cannot communicate informatively, but the closer legislator may communicate whether he would "compromise" or "fight" on ideology. Surprisingly, the proposer may be worse off when bargaining with two legislators (under majority rule) than with one (who has veto power), because competition between the legislators may result in less information conveyed in equilibrium. Despite separable preferences, the proposer is always better off making proposals for the two dimensions together.

Original languageEnglish
Pages (from-to)483-513
Number of pages31
JournalTheoretical Economics
Volume9
Issue number2
DOIs
Publication statusPublished - May 2014
Externally publishedYes

Keywords

  • Bundling
  • Cheap talk
  • Legislative bargaining
  • Private information
  • Rhetoric

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