Gambling over Public Opinion

• 成果类型: Article
• 署名作者: Basak, Deepal; Deb, Joyee
• 署名单位: Indian School of Business (ISB); Yale University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20181495
• 发表日期: 2020
• 页码: 3492-3521
• 关键词: commitment; equilibrium; EXISTENCE

摘要

We consider bargaining environments in which public opinion provides leverage by making compromises costly. Two parties make initial demands, before knowing the public opinion. If deadlocked, they can bargain again after public opinion forms, but suffer reputation costs if they compromise, i.e., scale back their demands. We show that in equilibrium, parties may choose to make incompatible demands initially and gamble over public opinion even though one or both parties must bear a cost later We characterize when deadlocks arise, and how this affects the welfare of the public in a representative two-party democracy compared to a direct democracy.