The Eurozone crisis and fall of the Slovak government: A rationalistic explanation

In August 2010, four coalition parties of the Slovak government approved European Financial Stability Facility (EFSF) that provided emergency financial assistance to Eurozone members. Yet their later opinion on extended and enlarged EFSF differed to a great extent despite intense communication. The Slovak government therefore lost the vote of no confidence, which was linked to EFSF extension approval in autumn 2011. Just a few days later, crucial EFSF modification was passed with support of the opposition party in exchange for an early elections. This self-destructive behavior of the ruling coalition remains a puzzle with the only available explanation merely referring to the irrationality of domestic political elite. The presented research tries to grasp this problem with help of game theory by focusing on preference orderings of two key players in the process leading to fall of the Slovak government. The Prime Minister and simultaneously the chairwoman of the strongest coalition party linked the vote on EFSF modification to the vote of no confidence. The Speaker of the Parliament then led a coalition party, which refused to participate at the vote of no confidence. These two leaders shaped the character of coalition negotiations, defined available options, and determined the fate of the government. Interviews with them can thus clarify the process of their decision-making as well as their preferences, which offers a unique opportunity to explain fall of the government from a rationalistic perspective.