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Coalition formation for unpopular reform in the presence of private reputation costs

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  • Winschel, Evguenia
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    Abstract

    This paper studies coalition formation under asymmetric information. An outside party offers private payments in order to influence the collective decision over an unpopular reform. The willingness to accept such payments is private information. The paper demonstrates that a supermajority coalition induces truth-telling and secures the implementation of the decision for a price close to the full information minimal winning coalition price. On the contrary, if the minimal winning coalition is formed, then no revelation is possible.

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    File URL: https://ub-madoc.bib.uni-mannheim.de/33006/1/Winschel_13%2D08.pdf
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    Bibliographic Info

    Paper provided by University of Mannheim, Department of Economics in its series Working Papers with number 13-08.

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    Date of creation: 2012
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    Handle: RePEc:mnh:wpaper:33006

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    Related research

    Keywords: coalition formation ; minimal winning coalition ; supermajority coalition ; private information;

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    1. Tsung‐Sheng Tsai & C. C. Yang, 2010. "On Majoritarian Bargaining With Incomplete Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 959-979, November.
    2. V. Crawford & J. Sobel, 2010. "Strategic Information Transmission," Levine's Working Paper Archive 544, David K. Levine.
    3. David Klingaman, 1969. "A note on a cyclical majority problem," Public Choice, Springer, vol. 6(1), pages 99-101, March.
    4. Ernesto Dal Bo, 2000. "Bribing Voters," Economics Series Working Papers 39, University of Oxford, Department of Economics.
    5. Persson, Torsten & Roland, Gérard & Tabellini, Guido, 1997. "Comparative Politics and Public Finance," CEPR Discussion Papers 1737, C.E.P.R. Discussion Papers.
    6. Diermeier, Daniel & Merlo, Antonio, 1998. "Government turnover in parliamentary democracies," Bulletins 7453, University of Minnesota, Economic Development Center.
    7. Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, vol. 71(1), pages 27-70, January.
    8. Diermeier, Daniel & Eraslan, Hulya & Merlo, Antonio, 2002. "Coalition governments and comparative constitutional design," European Economic Review, Elsevier, vol. 46(4-5), pages 893-907, May.
    9. Felgenhauer, Mike & Grüner, Hans Peter, 2003. "Committees and special interests," Working Paper Series 0293, European Central Bank.
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