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Brexit: Dynamic Voting with an Irreversible Option

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  • moldovanu, benny
  • Rosar, Frank

Abstract

We analyze Brexit-like decisions in a polarized society. An electorate decides repeatedly be-tween a reversible alternative (REMAIN) and an irreversible alternative (LEAVE). We comparestrengths and weaknesses of several mechanisms that can be used in reality. Voting by super-majority dominates voting by simple majority. Decisions by simple majority and by a toosmall supermajority can perform very poorly under circumstances where it is socially optimalto never LEAVE, as they can exhibit equilibria where LEAVE is chosen very quickly. Mechanisms where LEAVE requires (super)majorities in two consecutive periods avoid this problemwithout relying on fine-tuning, but can lead to inefficient delays. If a final decision for eitheralternative requires winning by a certain margin, and if a new vote is triggered otherwise, bothproblems, choosing LEAVE too easily and inefficient delays, can oftenbe avoided.

Suggested Citation

  • moldovanu, benny & Rosar, Frank, 2019. "Brexit: Dynamic Voting with an Irreversible Option," CEPR Discussion Papers 14101, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14101
    as

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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dynamic voting; Irreversible option; Option value; Supermajority rules;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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