The University of Southampton
University of Southampton Institutional Repository

Informational loss in bundled bargaining

Informational loss in bundled bargaining
Informational loss in bundled bargaining
We 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.
0951-6298
Chen, Ying
338aa31f-c129-49c9-b5b7-b583836a8cc1
Eraslan, Hülya
7ffc8aa5-cbc8-4deb-93c4-3ae2c86ea444
Chen, Ying
338aa31f-c129-49c9-b5b7-b583836a8cc1
Eraslan, Hülya
7ffc8aa5-cbc8-4deb-93c4-3ae2c86ea444

Chen, Ying and Eraslan, Hülya (2013) Informational loss in bundled bargaining. Journal of Theoretical Politics. (doi:10.1177/0951629813482232).

Record type: Article

Abstract

We 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.

PDF
__userfiles.soton.ac.uk_Users_nsc_mydesktop_info-loss-12-12-18.pdf - Accepted Manuscript
Download (484kB)

More information

Accepted/In Press date: 2013
e-pub ahead of print date: 28 April 2013
Organisations: Economics

Identifiers

Local EPrints ID: 353793
URI: https://eprints.soton.ac.uk/id/eprint/353793
ISSN: 0951-6298
PURE UUID: 0070f535-4969-4f65-a108-807ae94ca82b

Catalogue record

Date deposited: 18 Jun 2013 09:50
Last modified: 18 Jul 2017 04:01

Export record

Altmetrics

Contributors

Author: Ying Chen
Author: Hülya Eraslan

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×