In defense of factions

We model faction formation in a world where party politicians’ objective is the development of an informed program of governance. Politicians’ preferences reflect their own views and their information that, when aggregated via intra-party deliberations, influences the party manifesto. By joining a faction a politician increases the influence of its leader on the manifesto, but foregoes his individual bargaining power. For broad model specifications we find that a faction formation process allows power to be transferred to moderate politicians. This facilitates information sharing, so increasing the capacity of the party to attain its objective. These positive welfare effects may hold even when factionalism restricts intra-party dialogue, and hold a fortiori when information is freely exchanged across factions. We conclude that the existence of ideological factions may benefit a party: it provides a means to tie uninformed or extremist politicians to more moderate and informed faction leaders.