Referenda as a Catch-221

The result of a referendum delivers a signi…cant amount of information about social preferences to each composite member of the society. This paper argues that, beyond this obvious fact, the choice of an authority not to o¤er a referendum, although permitted to do so, may enhance the information individuals posses about social preferences as well. The addition of a referendum option in the rules of a game, that is, by enabling the authority to o¤er referenda at will, results in an assured re-election of the authorities that implement socially bene…cial policies, and reduces the likelihood of the re-election of the authorities that implement socially detrimental policies. In a sense, by allowing an authority to o¤er referenda, an inescapable Catch-22 is introduced in the game, which inhibits the re-election of a measure of "bad" authorities and, thus, con…rms that one of the main bene…ts of a democratic institution is the preservation of "good" authorities in power. It is, …nally, demonstrated that non-binding referenda are more in‡uential (in the directions described above) than binding referenda as far as the authority’s re-election prospect is concerned.