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Social Choice and Welfare

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01-09-2015

Representing a democratic constituency in negotiations: delegation versus ratification

Authors: Daniel Cardona, Clara Ponsatí

Published in: Social Choice and Welfare | Issue 2/2015

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Abstract

We consider negotiations where one of the parties is a group that must send a representative to the bargaining table. We examine the trade-offs that the group faces in choosing between two different regimes for this representation: (i) Delegation where the representative is granted full authority to reach an agreement, and (ii) Ratification, where any agreement reached by the representative requires a posterior ratification vote. We show that when the group has flexibility—to select the delegate or to set the majority threshold for ratification—the majority of the group favors delegation. Only when the flexibility is limited or delegates are (sufficiently) unreliable will the majority of the group prefer ratification.

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Most papers analyzing strategic delegation in bargaining environments consider that either a single player or a constituency with all members having the same preferences selects a representative. As a small sample, see Jones (1989), Burtraw (1992), Segendorff (1998), Cai (2000), Cai and Cont (2004), Harstad (2008), Chae (2009) or Christiansen (2013).

See Aghion and Tirole (1997) and Dessein (2002).

The preferences of the agents are not affected by the identity of the representative. This differs from Cai (2000) where, in a different setting, the representative gets utility from her role.

This is the outcome in the Nash solution, which prevails as the limit of equilibria under the usual non-cooperative alternating proposals formulations.

A different matter is whether this is sufficient for the group: If \(F\left( s\right) \le 1/2\) (that is, the reservation utility of the median voter’s is higher than \(s\)), a majority would prefer a disagreement.

Group decisions may strongly depend on the exact procedure used by the group, and consequently some decision rules may select outcomes different from the Condorcet winner—as in bureaucratic models with monopoly on the agenda à la Niskanen (1971). In a standard alternating offer majority bargaining game, Banks and Duggan (2000) display an example with a two-dimension policy space and single-peaked preferences such that non-Concorcet winners may be attained as equilibrium outcomes.

One may think, for instance, in scenarios where a legislature decides to grant full authority to the President or require that any agreement must be ratified by some qualified majority in the Congress. In these cases, the spokeswoman and the delegate coincide.

It is worth to anticipate the importance of this result on our further analysis: It allows to characterize majority decisions between any two different mode bargaining regimes.

Haller and Holden (1997) considered a representative with no explicit minimal requirements so that \(x_{sw}=0\). In this environment, they showed that \(g^{\prime }\left( s\right) >0\) assures the single-peakedness of \(U_{i} ^{R}\left( 0,x_{q}\right) \). Thus, the next proposition can be also extended to these cases.

Both, Haller and Holden (1997) and Perry and Samuelson (1994) consider that the reservation of the spokeswoman is zero. We also consider the possibility that she is the median.

We thank a referee for this remark.

Note that SP and SC are properties of preferences defined on the one-dimensional policy space. That is, for any given bargaining mode.

By assuming that when the true reservation utility is unrelated to \(x_{i}\) then it is drawn from \(F\), things would not change.

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Tarar A (2006) Bargaining power, the schelling conjecture, and “Fast-Track” Trade Negotiating Authority Unpublished work

Title: Representing a democratic constituency in negotiations: delegation versus ratification
Authors: Daniel Cardona
Clara Ponsatí
Publication date: 01-09-2015
Publisher: Springer Berlin Heidelberg
Published in: Social Choice and Welfare / Issue 2/2015
Print ISSN: 0176-1714
Electronic ISSN: 1432-217X
DOI: https://doi.org/10.1007/s00355-015-0895-2

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