Veto Power and Quality of Governmental Policy

35 Pages Posted: 23 Jul 2008 Last revised: 30 Dec 2010

See all articles by Tiberiu Dragu

Tiberiu Dragu

New York University

Oliver J. Board

New York University School of Law

Date Written: September 8, 2010

Abstract

Cheap talk models provide a strategic analysis of information transmission between the expert and the decision maker when their preferences are not perfectly aligned. Although the majority of these models analyze the case of a single decision maker, in many important settings the decision-making authority is shared between several agents. Here we consider a commonly used procedure: ultimatum bargaining. We examine how the addition of the second decision maker (the veto player) affects communication and the utilities of the players. Surprisingly, we find that the veto player may be worse off, and the first decision maker may be better off, than in the absence of the veto threat.

Keywords: information, cheap talk, veto power, experts

JEL Classification: D72, D78, D82

Suggested Citation

Dragu, Tiberiu and Board, Oliver James, Veto Power and Quality of Governmental Policy (September 8, 2010). Available at SSRN: https://ssrn.com/abstract=1163227 or http://dx.doi.org/10.2139/ssrn.1163227

Tiberiu Dragu (Contact Author)

New York University ( email )

19 West 4th Street
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HOME PAGE: http://wp.nyu.edu/tiberiu_dragu/

Oliver James Board

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

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