Essays on Dynamics and Information in Political Economy

Résumé du livre

"This thesis consists of three essays on political economy. It focuses on understanding how dynamics and information affect collective behavior. Chapter 1, studies the impact of dynamic interaction on agenda setting power. For a canonical model of bargaining with a fixed agenda setter, we show that when players are impatient or the set of alternatives is one-dimensional, the equilibrium outcome from the static model obtains; but when players are patient and the alternatives are multidimensional, the equilibrium outcome typically converges to the ideal point of the agenda setter due to the agenda setter's ability to play winning coalitions off against one another. Threat of exclusion in a dynamic bargaining environment can lead to extreme agenda setting power. Chapter 2, takes a step on understanding dynamic multilateral bargaining with asymmetric informaton. It studies the impact of reputational concerns on efficiency and surplus distribution in a simple non-unanimous bargaining environment. Three agents bargain over the division of one dollar with a protocol in which proposers are drawn i.i.d according to the uniform distribution over an infinite horizon and bargaining settles with the agreement of a majority. Each agent could be an obstinate type committed to claiming a certain share of the dollar. Assuming common conflicting claims and common discount factors, I show that this bargaining process can exhibit features in sharp contrast to their counterparts of bilateral reputational bargaining. In a reasonably refined class of equilibria, efficiency loss vanishes as rational types become patient and bargaining ends immediately if all agents are of rational types; moreover, when the prior probabilities of obstinacy are sufficiently low, the agent with the lowest positive prior of obstinacy obtains ex ante the largest share of the dollar. Chapter 3, changes attention from bargaining to auction. It studies competing auctions where each seller has private information about the quality of its object and chooses the reserve price of a second-price auction. Buyers observe the reserve prices and decide which auction to participate in. For a class of primitives, we show that a perfect Bayesian equilibrium exists for any finite market. In any such PBE, higher quality is signaled through higher reserve price at the expense of trade opportunities. But there might be bunching regions causing inefficiencies. In fact, in the large-market limit characterized by a directed search model, the interaction of adverse selection and search frictions entail distortion at the bottom: when either the buyer-seller ratio is sufficiently large or a regularity condition is met, there is no separating PBE in which the lowest-quality seller sets reserve price equal to its opportunity cost"--Pages vii-viii