The Roles of Transparency in Regime Change: Striking When the Iron's Gone Cold

Abstract

How does freedom of information about an institution's resilience affect its stability? We study the ex ante impact of public information on regime change in a global game, accounting for uncertainty over what will be communicated. A fundamental tension exists in the ways public information impacts coordination. When the probability of regime change is already high, public information persuades agents into larger attacks. But under these conditions information targets attacks wastefully. For 'small' releases of public information, we characterize the overall implications of this trade-off for regime change. When the incumbent is ex ante weak, public information persuades agents to attack while simultaneously reducing their chances of success. By contrast, lower costs imply transparency negatively affects regime change only if the marginal productivity of attacks is sufficiently high.

Keywords: Public Information, Coordination, Regime Change

JEL Classification: C72, D62, D82, D83