RESEARCH PAPER NO. 844

PARTY FORMATION IN COLLECTIVE DECISION-MAKING

BY

MARTIN J. OSBORNE & RABEE TOURKY

APRIL 2002

Department of Economics. University of Melbourne. Melbourne Victoria 3010 Australia

ABSTRACT

We study party formation in a general model of collective decision-making, modelling parties as agglomerations of policy positions championed by decision-makers. We show that if there are economies of party size and the policy chosen is not beaten by another policy in pairwise voting, then players agglomerate into exactly two parties. This result does not depend on the magnitude of the economies of party size or sensitively on the nature of the individuals' preferences. Our analysis encompasses a wide range of models, including decision-making in committees with costly participation and representative democracy in which legislature is elected by citizens.

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