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Though this be madness: A game-theoretic perspective on the Brexit negotiations

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  • Pitsoulis, Athanassios
  • Schwuchow, Soeren

Abstract

On June 19, 2017 the European Union and the British government officially commenced negotiations on the terms of the British exit from the union. The dominant view among most economic policy analysts and commentators seems to be that the cards are clearly stacked against Britain and that the high-handed behaviour of the British representatives is, at best, either a bluff or, at worst, a sign of a loss of reality. In this paper we develop a formal model to show how this uncertainty regarding the preferences and strategy of the British side may affect the dynamic of the negotiations and may lead to unanticipated outcomes.

Suggested Citation

  • Pitsoulis, Athanassios & Schwuchow, Soeren, 2018. "Though this be madness: A game-theoretic perspective on the Brexit negotiations," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181635, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc18:181635
    as

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    References listed on IDEAS

    as
    1. Dhingra, Swati & Ottaviano, Gianmarco I. P. & Sampson, Thomas & Reenen, John Van, 2016. "The consequences of Brexit for UK trade and living standards," LSE Research Online Documents on Economics 66144, London School of Economics and Political Science, LSE Library.
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    5. Catherine Barnard, 2017. "Law and Brexit," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(suppl_1), pages 4-11.
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    8. Pitsoulis, Athanassios & Schwuchow, Soeren C., 2017. "Holding out for a better deal: Brinkmanship in the Greek bailout negotiations," European Journal of Political Economy, Elsevier, vol. 48(C), pages 40-53.
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    More about this item

    Keywords

    Brexit; game theory; madman strategy; trembling-hand perfection;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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