Theoretical Economics 9 (2014), 483–513
Tweet
Rhetoric in legislative bargaining with asymmetric information
Ying Chen, Hülya Eraslan
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.
Keywords: Legislative bargaining, rhetoric, cheap talk, private information, bundling
JEL classification: C78, D72, D82, D83
Full Text: PRINT VIEW Supplementary appendix