Legislative coalitions with incomplete information

In most parliamentary democracies, proportional representation electoral rules mean that no single party controls a majority of seats in the legislature. This in turn means that the formation of majority legislative coalitions in such settings is of critical political importance. Conventional approaches to modeling the formation of such legislative coalitions typically make the "common knowledge" assumption that the preferences of all politicians are public information. In this paper, we develop a theoretical framework to investigate which legislative coalitions form when politicians' policy preferences are private information, not known with certainty by the other politicians with whom they are negotiating over what policies to implement. The model we develop has distinctive implications. It suggests that legislative coalitions should typically be either of the center left or the center right. In other words our model, distinctively, predicts only center-left or centerright policy coalitions, not coalitions comprising the median party plus parties both to its left and to its right.