Changes

Jump to navigation Jump to search
no edit summary
===Other Notes===
<b>Proposition 1</b>: For <math><P^{u}|s=0></math>, the legislative equilibrium is: (i) <math>b^{\ast}\in P</math>, (ii) <math>p^{\ast}(b)=-\bar{\omega}=1/2</math>, (iii) <math>g^{\ast}=\{\omega|\omega\in[0,1]\}</math>, and (iv) EU_{f}(P^{U}|s=0)=-\sigma^{2}_{w}</math>, (v) <math>EU_{c}(P^{U}|s=0)=-\sigma_{\omega}^{2}-x_{c}^{2}</math>.
<b>Proof</b>: <math>g^{\ast}(b)=\{w\in [0,1]\}</math> since b is not a function of w since c does not observe w. FLoro FLoor chooses p such that <math>\max_{p}\int_{0}^{1}-(p+w)^{2}f(w)dw, f(w)=1, w\in[0,1]</math>. <b>Comments</b>: 1) No information transmission, 2) Leads to "info losses" for both the floor and committee, 3) Risk aversion, 4) Incomplete info is not relevant, 5) Committee plays no role.
Anonymous user

Navigation menu