1,721,174 research outputs found
Evolving Aspirations and Cooperation
No full textA model of "satisficing" behavior in the repeated Prisoners Dilemma is studied. Each player has an aspiration at each date, and takes an action. [S]he switches from the action played in the previous period only if the achieved payoff fell below the aspiration level (with a probability that depends on the shortfall). Aspirations are updated in each period, according to payoff experience in the previous period In addition, aspirations are subjected to random perturbations around the going level, with a small "tremble" probability. For sufficiently slow updating of aspirations, and small tremble probability, it is shown that in the long run both players cooperate most of the time
Essays on information revelation and political institutions
Full text linkThis dissertation examines how political institutions shape incentives for the transmission of policy-relevant private information. The first two chapters present theoretical frameworks to examine strategic information transmission to political candidates by a biased adviser. The third explores the causal impact of gender representation on municipal outcomes in the United States.
In Chapter One, I examine a model of "cheap talk" lobbying with no commitment. A biased adviser seeks to influence the policy outcome of a Downsian election by sending messages to the two candidates before they announce their policy platforms. I show that the adviser may credibly reveal some information on voter preferences, but only privately to one candidate. Political competition has a disciplining effect; the adviser prefers extreme policies, but instead recommends a pragmatic policy --- one that is just close enough to voters' preference. In some situations, the presence of the biased adviser benefits the median voter.
The second chapter presents a model of informational lobbying with full commitment. The biased adviser strategically designs informative signals on voter preferences that will be observed by each of the two candidates. In contrast to the cheap talk context, the optimal signal structure is shown to involve only public signals that are observed by both candidates. In particular, candidates receive precise information about how extreme voter preferences are, but not whether voters lean right or left. Consequently, both candidates choose the same biased policy, as a result of which the median voter is always worse off.
Chapter Three investigates the effect of gender representation on municipal outcomes in the United States between 2008 and 2016. Using novel data, the analysis exploits close elections between male and female candidates to measure the impact of an exogenous increase in the number of female council members. Consistent with the existing literature, we find evidence of decreased per capita expenditure, which, we argue, is not driven by revenue constraints but by increased disagreement or "gridlock" within the council. We also find no significant effect of gender representation on the composition of municipal spending or on other women's political aspirations
Essays in industrial organization and political economy
No full text2023My dissertation studies two topics in industrial organization and political economy. The first two chapters investigate the difference between joint and solo bidders in their bidding strategies and winner’s curse levels in common value auctions. The third chapter examines how the political strategies of the ruling party change in response to the weakening of its control over localities. Chapter 1 performs a reduced-form analysis of joint bidding and the winner’s curse in first-price common value auctions, using data for the Outer Continental Shelf oil and gas leases auctions. My coauthor, Kippeum Lee, and I introduce a novel instrument utilizing a new dataset of firms' office addresses recorded in lease contract agreements. We then examine the impact of joint bidding on bid levels, revealing that joint bidders submit approximately 75% higher bids than solo bidders on average. We further study the effect of bidder structure and competition on average bids and show that one more joint bidder (and hence one less solo bidder) leads to an around 30% increase in the average bid for an auction, controlling for the overall competition level. Chapter 2 constructs a model of common value auctions with bidder asymmetry arising from joint bidding and measures the winner’s curse. My coauthor, Kippeum Lee, and I build a model of asymmetric common value auctions by dividing bidders into joint and solo types. We then consider a myopic-bidder model where bidders do not account for the winner’s curse. To quantify the winner's curse for both joint and solo bidders, we compare the expected common value of myopic bidders to that of rational bidders who internalize the “bad news” associated with winning for each bidder type. Based on the estimation of the winner’s curse, we find that solo bidders experience a more substantial winner’s curse relative to joint bidders. Chapter 3 studies the political manipulation of central-to-local transfers in the context of Japan. I build a theoretical model of budget allocation with imperfect local monitoring, predicting changes in allocation strategies in response to municipal consolidation. The empirical analysis finds that the long-ruling Liberal Democratic Party adjusted its distributional politics in response to the weakening of its control over localities, as observed during massive municipal mergers. The party favored locally aligned villages and competitive constituencies before the merger period. However, the party shifted its allocation strategy by providing more funds to highly competitive constituencies during the merger period without differentiating between villages based on local alignment
Three essays in development economics
Full text linkThis dissertation consists of three chapters studying topics in education, labor market reforms, and gender inequality in China.
The first chapter investigates the impacts of the largest primary school consolidation ever implemented, using the China Health and Nutrition Survey between 1989 and 2015. Employing a generalized Difference-in-Differences (DID) framework that is robust to heterogeneous treatment effects, I find that school consolidations increased educational attainment of females but not of males. In contrast, treated individuals of both genders achieved higher earnings. I provide suggestive evidence consistent with the mechanisms of enhanced labor market proximity and gender equity resulting from school consolidations. The analysis of the distributional effects indicates that individuals in the middle part of income distribution benefited more, and the increase in inequality was small relative to the rise in average earnings.
The second chapter provides evidence on how talent reallocation from the public sector to the private sector contributed to entrepreneurship and innovation, in a unique Chinese public sector reform in the 1990s. The reform terminated guaranteed public sector job allocation for tertiary graduates, reducing labor mobility costs across sectors. I construct a novel dataset of the tertiary graduate number in different majors across prefectures and pair it with administrative data of firm entry in particular industries. I combine both the DID and Regression-Discontinuity Design (RDD) identification strategy and find that after the reform, tertiary graduate earnings decreased, and more tertiary graduates worked in the private sector or became entrepreneurs. The resulting talent reallocation led to a boom in the private sector. After the reform, prefectures with more tertiary students who graduated from industry-related majors experienced greater entry of private firms in those industries. The reform also stimulated market-oriented innovation activities such as market design patents and trademarks.
The third chapter (joint with Wenyu Zhou) highlights that the difference in exploiting destination information between male and female drivers perpetuates gender earning inequality in the ride-hailing industry. Using order-level data in December 2018 in Hangzhou City, we find a 3% hourly earning gap across genders. The gender earning gap is larger for platforms displaying the destination information to drivers before accepting the ride. We argue this difference is caused by gender differences in the utilization of destination information. Male drivers are more likely to select more profitable rides because of greater experience. Consistent with this mechanism, we find the gender gap in speed is also larger on platforms that show destination information
Essays on organizational economics
No full text2023This dissertation delves into organizational economics, focusing on the impact of market conditions and firm boundaries on long-term relationships. I apply both theoretical and empirical methods to understand how partners' options outside their relationships affect their incentives to maintain cooperation and the resulting market outcomes. The first two chapters present game-theoretical models to explore how outside options shape the nature, value, and dynamics of relationships. The third chapter provides evidence supporting the findings in the second chapter on the labor market consequences of firms' labor outsourcing choices. Overall, these studies offer novel insights into dynamic interactions in various markets. In the first chapter, I explore the effects of reducing market frictions on relationship dynamics. I develop a repeated-game model in which partners in bilateral relationships have the opportunity to leave each other and search for new partners in a frictional matching market. I find that optimal relationships transition from stationary to non-stationary as market frictions decrease. I also present an inverted U-shaped relationship between principals' post-matching values and matching probabilities. Moreover, welfare decreases when relationships are in the non-stationary zone. My findings offer empirical implications for understanding relationship dynamics in different markets and provide a simple method to evaluate the welfare effects of reducing market frictions. In the second chapter, Michael B. Wong and I develop a theory of the firm as a nexus of relational contracts to explain the existence and boundaries of specialized firms in frictionless matching markets. In our model, entrepreneurs choose whether to directly enter relational employment contracts with workers or outsource from intermediaries who employ workers. The optimal choice depends on the expected duration of business needs and the tightness of the labor market. The model not only generates realistic predictions regarding firm boundaries, but also explains worker-level evidence and recent macroeconomic trends. In the third chapter, Michael B. Wong and I further investigate the labor market implications of domestic labor outsourcing. Analyzing Brazilian administrative panel data, we observe a decrease in workers' wage levels and wage dispersion as a result of outsourcing. However, we find that outsourcing enhances job security for workers over the first years of their employment. These findings provide empirical confirmation of the rent-stripping and demand-smoothing effects of outsourcing on workers' job quality, as established in the second chapter
Essays in the political economy of development
Full text linkThis dissertation studies the political economy of development. I focus on understanding two major challenges to development: corruption and conflict. The three chapters explore how patronage systems lead to more corruption and insufficient provision of public goods, how managerial incentives create allocative inefficiency, and how economic policies shape social conflict.
In the first chapter, I investigate the societal consequences of patronage systems, a globally pervasive phenomenon characterized by reciprocal benefits between two individuals of unequal political status.
I identify the detrimental societal consequences of patronage connections by studying the aftermath of the devastating 2008 Sichuan Earthquake. Using an original building-level dataset, I show, in a generalized difference-in-differences framework, that buildings constructed when county officials had connections to their prefectural superiors (in terms of having the same hometown) are 13 percentage points (83 percent) more likely to collapse than comparable ones unaffected by such connections. These findings uncover the latent social cost arising from patron-client networks within bureaucratic organizations. My results also highlight the fact that institutional failures are often only obvious ex post, and their consequences may be hidden and hard to observe in the absence of a negative shock.
In the second chapter, I examine the efficiency consequences of target setting, a popular managerial tool in many organizations worldwide. In the context of state bank lending, I show that bank managers have incentives to lend to state-owned enterprises (SOEs) despite their higher default risk, as such lending provides an easy way for the managers to meet their monthly lending targets. I reveal this effect by studying the loan portfolio of a large Chinese state bank during the period 1997--2010. By comparing loans made earlier with those made later in the month, I show an overall end-of-month lending increase of about 92 percent, and that a month-end loan is more than 1.1 percentage points (8 percent) more likely to be classified eventually as a bad loan. The month-end quality decline is driven primarily by loans to SOEs, suggesting that bank managers turn to (higher-risk) SOEs as needed to meet loan quantity targets, while maintaining relatively high standards for non-SOE lending.
In the third chapter, I investigate the economic source of conflict that may result from limited access to regional trade. I document this effect by looking at the closure of China's Grand Canal since 1826, which, at the time, was the world's largest and oldest artificial waterway and had promoted the commercial prosperity of its neighboring markets for over 800 years. The closure was decided by the emperor in an effort to promote the sea transportation of tribute rice, which greatly disrupted trade access in those areas. My analyses show that regions close to the canal became much more rebellious relative to those farther away from the canal after its closure. The study highlights the important role that continued access to trade routes plays in preventing conflict, a classic conjecture that has rarely been directly tested in a causal context. The findings also shed light on the chronic social disorder that afflicted nineteenth-century North China
Essays in development economics
Full text linkThis dissertation consists of three chapters in development economics which investigate questions related to intergroup contact and the consequences of civil conflicts.
In the first chapter, I study how refugee networks influence social integration in the host community in the context of Turkey, a country that has been profoundly impacted by the arrival of more than 3.5 million Syrian refugees since 2011. Using a rich dataset on the mobile phone communications of Syrian refugees, I construct village-level measures of refugee presence and social integration. In villages with a larger refugee population, refugees made significantly more phone calls to locals and other refugees, and a higher proportion of their calls were placed to locals. I argue that refugee networks made it easier for their members to interact with locals by sharing information on local norms and creating new opportunities to meet locals.
The second chapter examines how the cost of inter-ethnic contact influences inter-ethnic relations. The study uses the staggered improvements of the Indonesian road network during the 1990s and shows that it lowered the cost of intergroup contact. The resulting enhancement in access to other ethnic groups led to increasing rates of inter-ethnic marriages.
The third chapter investigates the long-run effects of civil conflicts on human capital that owe their impact to family structure. Specifically, I study how the loss of a sibling during the 1994 genocide against Tutsis in Rwanda affected surviving children. The loss of a sibling had positive effects on human capital and negative effects on wealth. I argue that these results are consistent with standard models of fertility choice, although other mechanisms could also have played a role
Decentralizing Bolivia: local government in the jungle
No full textDoes decentralization change policy outputs at the local level? If so, for better or worse? Do such changes reflect deep changes in the policy-making process itself, or are they related to technical parameters in the flow of funds? Why do some local governments respond well to decentralization while others respond badly? These are some of the most important questions surrounding the issue of decentralization, which remain open despite a large related literature. This paper seeks to answer some of these questions for the remarkable case of Bolivia, through a blend of econometric analysis at the national level and detailed qualitative research into local political and institutional processes. I argue that the "outputs" of decentralization are simply the aggregate of local-level political and institutional dynamics, and so to understand decentralization we must first understand how local government works. Hence we examine what decentralization did at the national level, and then dig down into local government processes to understand how it did it
A theory of progressive lending
Full text linkhttps://people.bu.edu/dilipm/wkpap/ProglendSept2021.pdfFirst author draf
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