Rhetoric in Legislative Bargaining with Asymmetric Information

Abstract

We analyze a three-player legislative bargaining game in which legislators privately informed about their preferences bargain over an ideological and a distributive decision. Communication takes place before a proposal is offered and majority rule voting determines the outcome. When ideological intensities are private information but ideological positions are publicly known, it is not possible for all legislators to communicate informatively. Furthermore, the legislator who is ideologically more distant from the proposer may not communicate informatively, but the closer legislator can communicate whether he would "compromise" or "fight" on ideology. If instead ideological positions are private information, then all legislators may convey whether they will "cooperate," "compromise," or "fight" on ideology. When the uncertainty is about ideological intensity, the proposer is always better o making proposals for the two dimensions together despite separable preferences, but when the uncertainty is about ideological positions, bundling can result in informational loss which hurts the proposer.

Keywords: legislative bargaining, multilateral bargaining, multi-issue bargaining, cheap talk, communication

JEL Classification: C78, D72, D82, D83