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A Formal Model of Exit and Voice

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  • Scott Gehlbach

    (University of Wisonsin, Madison, USA; gehlbach@polisci.wisc.edu)

Abstract

I re-examine Hirschman's classic text Exit, Voice, and Loyalty through a game-theoretic interpretation of the relationship between exit and voice. The model, which is general and applicable to diverse environments, treats exit as a costly decision, which may be prevented through an appropriate choice of policy by the leadership of an organization. Voice – the capacity of an organization's members to participate in the setting of policy – is similarly costly, but provides a share of the surplus from avoiding exit. The formalization sheds light on the static and dynamic effects of exit, the conditions for the development of voice, the impact of loyalty, and the decision of organizational leaders to suppress voice and exit. I illustrate the model by revisiting Hirschman's analysis of exit and voice in the collapse of East German communism.

Suggested Citation

  • Scott Gehlbach, 2006. "A Formal Model of Exit and Voice," Rationality and Society, , vol. 18(4), pages 395-418, November.
    • Handle: RePEc:sae:ratsoc:v:18:y:2006:i:4:p:395-418
    DOI: 10.1177/1043463106070280
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    References listed on IDEAS

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    2. Brad R. Taylor, 2016. "Exit and the Epistemic Quality of Voice," Economic Affairs, Wiley Blackwell, vol. 36(2), pages 133-144, June.
    3. Bruno S Frey, 2023. "Camouflage: A dominant reaction to worsening conditions," Rationality and Society, , vol. 35(3), pages 366-384, August.
    4. Croke,Kevin & Garcia Mora,Maria Elena & Goldstein,Markus P. & Mensah,Edouard Romeo & O'Sullivan,Michael B., 2020. "Up before Dawn : Experimental Evidence from a Cross-Border Trader Training at the Democratic Republic of Congo?Rwanda Border," Policy Research Working Paper Series 9123, The World Bank.
    5. Bekius, Femke & Meijer, Sebastiaan & de Bruijn, Hans, 2018. "Collaboration patterns in the Dutch railway sector: Using game concepts to compare different outcomes in a unique development case," Research in Transportation Economics, Elsevier, vol. 69(C), pages 360-368.
    6. Takashi Shimizu, 2017. "Cheap talk with an exit option: a model of exit and voice," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(4), pages 1071-1088, November.
    7. Deegen, Peter, 2016. "Private and public timber production: How markets and political institutions matter," Forest Policy and Economics, Elsevier, vol. 72(C), pages 56-65.

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