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Governments with elected leaders (Democracy, Mercantile Guild, Republic, Utopian Paradise, Way of the Ancients) have a small chance each year to generate a new leader that replaces the current leader in an election. More advanced leaders have a smaller chance of being replaced. The happiness and income of the faction also affects the chance of a new leader, so a less happy, war-weary populace with negative income is far more likely to lead to a change of government. For Mercantile Guild, income is the most important influence on the probability of a new Leader being elected, for Utopian Paradise, happiness is the main influence.
When an elected government changes leaders, there is a significant temporary boost in happiness and a reduction in the war weariness level (if any) though these will return to their previous levels over time, if everything else remains the same. Elected governments immediately replace a leader that is lost or retires without any disruption. Unelected governments that lose a leader gain a replacement immediately, but also suffer a period of disruption. The disruption makes revolting systems and civil war more likely, as if the government type were changing each year, though not quite as severe. As long as the disruption continues, there is also a chance that the leader may change again.
Way of Darkness has the highest chance of minimizing this period of disruption, followed by Monarchy, Technocracy and Corporate Nationalism. Feudalism and Military Dictatorship are more likely to have a longer period of disruption. Governments that do not have elected leaders (Despotism, Feudalism, Hive Mind, Military Dictatorship, Monarchy, Technocracy, Corporate Nationalism, Way of Darkness) normally get to keep their leader until the leader is removed by events or is otherwise eliminated. However, there is a chance of a change of leader (much smaller than that of elected governments) based on certain factors.
For Despotism, there is always a small chance of a revolt leading to an overthrow of the despot. This revolt can result in a new Despot or a new type of government. Very low happiness, low military power and low espionage can all increase this chance. Despotism has the advantage that new leaders under Despotism start out with extra advancements when compared to other government types, due to the “survival of the fittest” ideology.
For Feudalism, Monarchy and Corporate Nationalism, the more colony governors there are, the greater the chance of a change in Leader, though the chance should still be very small compared to elected governments. If there is a leadership change, a colony governor is removed and becomes the new Leader, with the same name and new skills and traits (which may be influenced by the skills and traits the character had as a governor).
For Hive Mind, the larger the overall population, the longer the period of disruption. The chance of spontaneous government change for Hive Mind is the smallest of all the unelected government types.
For Military Dictatorship, the number of generals and fleet admirals increases the chance of a change in leader. Similar to Feudalism, if there is a change, a general or fleet admiral is removed and becomes the new leader.
For Technocracy, similar to Feudalism but with Scientists as the key influence.
source: http://www.matrixgames.com/forums/fb.asp?m=3337066