Suchergebnisse

It is rare in parliamentary democracies for one party to win more than half the votes. Choosing new policies or new governments depends on coalitions of legislative parties. We study the formation of these coalitions under the assumption of incomplete information. Therefore, rather than assuming that each politician's private preferences are known to everybody, we make the more plausible and general assumption that politicians can never be certain about the preferences of others, especially because those others may have strategic incentives to misstate these preferences. This approach has implications that are both distinctive and plausible. Policy coalitions should typically be either of the center left or the center right, but should not comprise parties from both left and right of center.

Abstract
This paper studies how hiding sunk cost of investment would affect investment strategies in a duopoly. The investment would improve profit. If this improvement is larger for the first mover than the second mover, this study finds a unique symmetric equilibrium for a subset of such cases. On the other hand, a larger improvement for the second mover results in a class of symmetric equilibria. For the first case, the surplus to sharing information increases with higher volatility of profit flow and lower uncertainty about the investment cost. For the second case, this surplus grows with both mentioned types of uncertainty.

In most parliamentary democracies, proportional representation electoral rules mean that no single party controls a majority of seats in the legislature. This in turn means that the formation of majority legislative coalitions in such settings is of critical political importance. Conventional approaches to modeling the formation of such legislative coalitions typically make the "common knowledge" assumption that the preferences of all politicians are public information. In this paper, we develop a theoretical framework to investigate which legislative coalitions form when politicians' policy preferences are private information, not known with certainty by the other politicians with whom they are negotiating over what policies to implement. The model we develop has distinctive implications. It suggests that legislative coalitions should typically be either of the center left or the center right. In other words our model, distinctively, predicts only center-left or center-right policy coalitions, not coalitions comprising the median party plus parties both to its left and to its right.