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Secessions and Political Extremism: Why Regional Referenda Do Not Solve the Problem

Anders Olofsgård

Journal of the European Economic Association, 2004, vol. 2, issue 5, 805-832

Abstract: This paper shows that an uninformed player can increase his bargaining power by committing to receive information from an expert more skeptical to cooperation. This general idea is applied to a model in which a regional political leader (the expert) influences voting in a referendum on independence by strategically disseminating information about the consequences of separation. I show that this motivates a moderate electorate to appoint a more extreme leader, to receive biased information that increases their bargaining power over the gains of staying unified. However, a trade-off between bargaining power and precision of information causes inefficient outcomes in equilibrium. (JEL: C73, D72, D82, H77) Copyright (c) 2004 by the European Economic Association.

Date: 2004
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