Referenda as a Catch-22

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 not to o¤er a referendum by an authority, although permitted to do so, may enhance as well the information individuals posses about social preferences. 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 authorities that implement socially bene…cial policies, and in a decrease of the re-election probability of authorities that implement socially obnoxious 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.