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

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  • Winschel, Evguenia

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.

Suggested Citation

  • Winschel, Evguenia, 2012. "Coalition formation for unpopular reform in the presence of private reputation costs," Working Papers 13-08, University of Mannheim, Department of Economics.
  • Handle: RePEc:mnh:wpaper:33006
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    File URL: https://ub-madoc.bib.uni-mannheim.de/33006/1/Winschel_13-08.pdf
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    References listed on IDEAS

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    1. Torsten Persson & Gerard Roland & Guido Tabellini, 2000. "Comparative Politics and Public Finance," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1121-1161, December.
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    4. Daniel Diermeier & Hulya Eraslan & Antonio Merlo, 2003. "A Structural Model of Government Formation," Econometrica, Econometric Society, vol. 71(1), pages 27-70, January.
    5. Mike Felgenhauer & Hans Peter Grüner, 2008. "Committees and Special Interests," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(2), pages 219-243, April.
    6. David Klingaman, 1969. "A note on a cyclical majority problem," Public Choice, Springer, vol. 6(1), pages 99-101, March.
    7. Dal Bo, E., 2000. "Bribing Voters," Economics Series Working Papers 9939, University of Oxford, Department of Economics.
    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. repec:cup:apsrev:v:68:y:1974:i:02:p:505-518_11 is not listed on IDEAS
    10. repec:cup:apsrev:v:90:y:1996:i:02:p:303-315_20 is not listed on IDEAS
    11. 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.
    12. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

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

    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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