“Information Cascades and Revolutionary Regime Transitions”
Why are some countries democratic and others not? Why do some countries have stable political institutions and others seem to be in a constant state of flux? And why do some revolutions succeed while others fail miserably? Christopher Ellis and John Fender attempt to quantify the effect of information cascades and how they relate to revolutionary regime changes. They argue that, in analyzing individual decisions to rebel in a world where information is both asymmetric and idiosyncratic and where individuals may learn of another’s idiosyncratic information by observing his behavior, information cascades arise and show that a revolution is synonymous with an information cascade. This conceptual framework allows us to imperfectly address questions concerning the relationships between the transmission of information and the inherent nature of political institutions and transitions.
In this conceptual model, the population of a country is divided into three groups: rich, middle-class, and poor people. Also out of these three agents, there are two agents, rich and poor, that account for three possible types of regime change: oligarchy, where they key decision maker is the rich, and democracy and a post-revolutionary society, where both of the median voters are poor. Policy makers of the government decide on a tax structure and whether or not to extend the right to vote to everyone. In situations where governments do not extend the franchise, poor individuals decide whether or not to mount a rebellion, and if enough of them do then the regime will be overthrown.
The ability of the government and the ruling elite to suppress and tailor the information received by poor individuals has a significant impact on the outcome of revolutions and regime changes. Each poor individual, however, can engage in the act of political protest, and this option to protest occurs sequentially across the poor population whom observe choices made by other who precede them. This transmission of information allows individuals to make inferences about the signals others have received and update their beliefs accordingly. Once the dissemination process reaches a point where the updated beliefs of the poor masses exceeds some critical probability, regardless of the new information they receive from others, and information cascade triggered and subsequent decisions to protest reveal no new information. This information transmission and subsequent cascade of information leads to rebellion and possibly revolution.