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Inefficient Predation, Information, and Contagious Institutional Change

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  • Paul Maarek

    (THEMA, Universite de Cergy-Pontoise)

  • Michael Dorsch

    (The American University of Paris)

Abstract

This paper presents an agency theory of revolutionary political transitions from autocracy to democracy. We model authoritarian economic policy as the equilibrium outcome of a repeated game between an elite ruling class and a disenfranchised working class, in which workers have imperfect information about the elite's policy choice and the economy's productive capacity. We characterize the conditions under which, in equilibrium, (i) the elite will set inefficient economic institutions under the threat of revolution, (ii) information shocks can catalyze democratic revolutions that may be contagious among similar countries, and (iii) democracy can be consolidated following a political transition.

Suggested Citation

  • Paul Maarek & Michael Dorsch, 2012. "Inefficient Predation, Information, and Contagious Institutional Change," THEMA Working Papers 2012-32, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2012-32
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    References listed on IDEAS

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    Cited by:

    1. Paul Maarek & Michael Dorsch & Karl Dunz, 2012. "Macro Shocks, Regulatory Quality and Costly Political Action," THEMA Working Papers 2012-41, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    2. Dorsch, Michael & Dunz, Karl & Maarek, Paul, 2012. "Asymmetric Information and Inefficient Regulation of Firms Under the Threat of Revolution," MPRA Paper 38879, University Library of Munich, Germany.

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    More about this item

    Keywords

    Political transition; Revolution; Asymmetric information; Contagion; Democratic consolidation; Arab Spring;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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