Informational Loss in Bundled Bargaining
AbstractWe analyze a legislative bargaining game over an ideological and a distributive issue. Legislators are privately informed about their ideological positions. Communication takes place before a proposal is offered and majority rule voting determines the outcome. We compare the outcome of the "bundled bargaining" game in which the legislators negotiate over both issues together to that of the "separate bargaining" game in which the legislators negotiate over the issues one at a time. Although bundled bargaining allows the proposer to use transfers as an instrument for compromise on the ideological issue, we identify two disadvantages of bundled bargaining under asymmetric information: (i) risk of losing the surplus (failure to reach agreement on ideology results in the dissipation of the surplus under bundled bargaining, but not under separate bargaining); (ii) informational loss (the legislators may convey less information in the bundled bargaining game). Even when there is no risk of losing the surplus, the informational loss from bundling can be sufficiently large that it makes the proposer worse off.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1234.
Length: 34 pages
Date of creation: Dec 2012
Date of revision:
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert Gibbons & Joseph Farrell, 1988.
"Cheap Talk Can Matter in Bargaining,"
482, Massachusetts Institute of Technology (MIT), Department of Economics.
- Farrell, Joseph & Gibbons, Robert, 1988. "Cheap Talk Can Matter in Bargaining," Department of Economics, Working Paper Series qt3qz786xq, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Joseph Farrell and Robert Gibbons., 1988. "Cheap Talk Can Matter in Bargaining," Economics Working Papers 8863, University of California at Berkeley.
- Daniel Diermeier & Antonio Merlo, 1998.
"Government Turnover in Parliamentary Democracies,"
1232, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jackson, Matthew O. & Moselle, Boaz, 2002.
"Coalition and Party Formation in a Legislative Voting Game,"
Journal of Economic Theory,
Elsevier, vol. 103(1), pages 49-87, March.
- Jackson, Matthew O. & Moselle, Boaz, 1998. "Coalition and Party Formation in a Legislative Voting Game," Working Papers 1036, California Institute of Technology, Division of the Humanities and Social Sciences.
- V. Crawford & J. Sobel, 2010.
"Strategic Information Transmission,"
Levine's Working Paper Archive
544, David K. Levine.
- Chen, Ying & Eraslan, Hulya, 2014.
"Rhetoric in legislative bargaining with asymmetric information,"
Econometric Society, vol. 9(2), May.
- Ying Chen & Hülya Eraslan, 2010. "Rhetoric in Legislative Bargaining with Asymmetric Information," Economics Working Paper Archive 563, The Johns Hopkins University,Department of Economics.
- Ying Chen & Hülya Eraslan, 2010. "Rhetoric in Legislative Bargaining with Asymmetric Information," KoÃ§ University-TUSIAD Economic Research Forum Working Papers 1021, Koc University-TUSIAD Economic Research Forum.
- Matthews, Steven A. & Postlewaite, Andrew, 1989.
"Pre-play communication in two-person sealed-bid double auctions,"
Journal of Economic Theory,
Elsevier, vol. 48(1), pages 238-263, June.
- Steven A. Matthews & Andrew Postlewaite, 1987. "Pre-Play Communication in Two-Person Sealed-Bid Double Auctions," Discussion Papers 744R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthews, Steven A, 1989. "Veto Threats: Rhetoric in a Bargaining Game," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 347-69, May.
- Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June.
- Chakraborty, Archishman & Harbaugh, Rick, 2003. "Cheap talk comparisons in multi-issue bargaining," Economics Letters, Elsevier, vol. 78(3), pages 357-363, March.
- Gilligan, Thomas W & Krehbiel, Keith, 1987. "Collective Decisionmaking and Standing Committees: An Informational Rationale for Restrictive Amendment Procedures," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 287-335, Fall.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sumru Oz).
If references are entirely missing, you can add them using this form.