Gambling on Reform

48 Pages Posted: 8 Jan 2010

Date Written: April 2007


Why do autocrats sometimes initiate political liberalization when they know those reforms could empower groups that might overthrow them? Drawing on the work of Levi (1988), North (1981, 1990), and others, I develop a game theoretic model of political economy in authoritarian regimes that shows how rulers might sometimes choose liberalization in spite of its attendant risks in an effort to realize economic gains through reductions in transaction costs. The resulting game illuminates important strategic dilemmas confronting rulers and citizens in authoritarian regimes; suggests new ways of thinking about how institutions under authoritarian rule reflect those dilemmas; and shows how efforts by outside actors to induce democratization through support for popular uprisings may often be counterproductive.

Keywords: liberalization, dictatorship, reform, transaction costs, game theory

JEL Classification: C72, C73, D72

Suggested Citation

Ulfelder, Jay, Gambling on Reform (April 2007). Available at SSRN: or

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