Informational loss in bundled bargaining

Bibliographic Data

ID6298570
AuthorsYing Chen (0000-0002-4780-4642, Arizona State University, Tempe, AZ, USA), Hülya Eraslan (0000-0002-9938-968X, Johns Hopkins University, Baltimore, MD, USA)
Year2013
Volume25
Issue3
Pages338-362
Publication date2013-07-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Theoretical Politics (JOURNAL)
Journal identifiersISSN: 0951-6298 • E-ISSN: 1460-3667
PublisherSAGE Publications Inc (PUBLISHER)
DOI10.1177/0951629813482232
OpenAlexW1984392648
LanguageEN
Citations received3
References cited15

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

Bargaining power · Bargaining problem · Compromise · Economics · Ideology · Legislature · Microeconomics · Negotiation · Outcome (game theory · Political science · Politics · Voting · Auction Theory and Applications · Game Theory and Applications · Game Theory and Voting Systems · Law

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