Secessions and Political Extremism: Why Regional Referenda Do Not Solve the Problem
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.
Volume (Year): 2 (2004)
Issue (Month): 5 (09)
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