Sequential agenda setting with strategic and informative voting

Abstract

We present a two-period collective bargaining model with asymmetric information and a persistent agenda setter. Voters have private information about their policy preferences. Only upon the failure of the initial proposal does the setter have a chance to revise it and call for a re-vote. The status quo gets implemented if the revised proposal fails. We establish the existence of an informative equilibrium for any number of voters and any q-rule, where the first-period voting enables the voters to signal their policy preferences and the setter makes a more compromising proposal upon more negative votes. We apply the model to identify important sources that improve political outcomes regarding individuals’ welfare and policy progress. Specifically, we show that the setter’s reconsideration opportunity improves her welfare and alleviates policy gridlock, which is defined as the outcome of no policy change. Meanwhile, the information revealed through voting can also benefit the voters, provided that the setter is sufficiently constrained by the voting rule. In addition, voters’ less sophistication can not only make a further Pareto improvement for themselves and the setter but can also avoid policy gridlock to a larger extent.