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24.01. BGSE Micro Workshop: Frank Rosar

BGSE Micro Workshop with Frank Rosar (University of Bonn)

Event details
What
  • BGSE Workshop
When Jan 24, 2017
from 12:00 to 13:00
Where room 0.017
Contact Name Stephan Lauermann
Contact Email
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Topic

Brexit

 

Abstract

We exhibit a simple, natural model for analyzing Brexit-like decisions. An electorate decides repeatedly between a reversible action (remain) and an irreversible action (leave). Our focus lies in comparing strengths and weaknesses of several mechanisms that are simple enough for actually being used in reality. When always the socially optimal equilibrium is induced, deciding by supermajority dominates deciding by simple majority. However, multiple equilibria can exist, some of which have bad welfare properties. When the mechanism is modified such that leave requires a certain majority in consecutive periods, the bad equilibria cease to exist but inefficient delays can arise in any equilibrium. The positive properties of both types of mechanisms can be combined by requiring increasing majorities in consecutive periods.












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