Coalition formation for unpopular reform in the presence of private reputation costs
AbstractThis 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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Bibliographic InfoPaper provided by University of Mannheim, Department of Economics in its series Working Papers with number 13-08.
Date of creation: 2012
Date of revision:
coalition formation ; minimal winning coalition ; supermajority coalition ; private information;
Find related papers by JEL classification:
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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