The Difficulty of Easy Projects, with Wioletta Dziuda and Mehdi Shadmehr.
American Economic Review: Insights (2021).
We consider private contributions to threshold public good projects that succeed when the number of contributors exceeds a threshold. For standard distributions of contribution costs, valuable threshold public good projects are more likely to succeed when they require more contributors. Raising the success threshold reduces free-riding incentives, and this strategic effect dominates the direct effect. Remarkably, common sense holds and easier projects are more likely to succeed for cost distributions with right tails fatter than Cauchy. Our results suggest government grants reduce the likelihood that valuable, threshold public good projects succeed, unless the tail of contribution costs is sufficiently fat.
School Choice under Partial Fairness, with Umut Dur and Özgür Yılmaz.
Theoretical Economics (2019).
We generalize the school choice problem by defining a notion of allowable priority violations. In this setting, a weak axiom of stability (partial stability) allows only certain priority violations. We introduce a class of algorithms called the student exchange under partial fairness (SEPF). Each member of this class gives a partially stable matching that is not Pareto dominated by another partially stable matching (i.e., constrained efficient in the class of partially stable matchings). Moreover, any constrained efficient matching that Pareto improves upon a partially stable matching can be obtained via an algorithm within the SEPF class. We characterize the unique algorithm in the SEPF class that satisfies a desirable incentive property. The extension of the model to an environment with weak priorities enables us to provide a characterization result that proves the counterpart of the main result in Erdil and Ergin (2008).
Missing Discussions: Institutional Constraints in the Islamic Political Tradition,
with James A. Robinson and Mehdi Shadmehr.
NBER Working Paper No. 30916.
Institutional constraints to counter potential abuses in the use of political power have been viewed as essential to well functioning political institutions and good public policy outcomes in the Western World since the time of ancient Greece. A sophisticated intellectual tradition emerged to justify the need for such constraints. In this paper we identify a new puzzle: such an intellectual tradition did not exist in the Islamic world, even if the potential for abuse was recognized. We develop a model to explain why such ideas might not have emerged. We argue that this is due to the nature of Islamic law (the Sharia) being far more encompassing than Western law, making it easier for citizens to identify abuses of power and use collective action to discipline them. We study how the relative homogeneity and solidarity of Islamic society fortified this logic.
Repression and information manipulation are two main tools of any authoritarian regime. Most theories, classic and recent, consider them as substitutes. Our theoretical model demonstrates how repression and propaganda complement each other: when the harshest regimes' critics are repressed, the effect of persuasion on the rest of the society is stronger and propaganda is used more heavily. We also demonstrate that the dictator cannot do better than resorting to public messaging even if he has an opportunity to tailor his message to citizens with different attitudes towards the regime.
This paper presents a model of partisan media trying to persuade a sophisticated and heterogeneous audience. We base our analysis on a Bayesian persuasion framework where receivers have heterogeneous preferences and beliefs. We identify an intensive-versus-extensive margin trade-off that drives the media's choice of slant: Biasing the news garners more support from the audience who follows the media but reduces the size of the audience. The media's slant and target audience are qualitatively different in polarized and unimodal (or non-polarized) societies. When the media's agenda becomes more popular, the media become more biased. When society becomes more polarized, the media become less biased. Thus, polarization may have an unexpected consequence: It may compel partisan media to be less biased and more informative.
Improving the Deferred Acceptance with Minimal Compromise,
with Mustafa Oguz Afacan, Umut Dur, and Özgür Yılmaz.
In school choice problems, the motivation for students' welfare (efficiency) is restrained by concerns to respect schools' priorities (fairness). Even the best matching in terms of welfare among all fair matchings (SOSM) is in general inefficient. Moreover, any mechanism that improves welfare over the SOSM is manipulable by the students. First, we characterize the "least manipulable" mechanisms in this class: upper-manipulation-proofness ensures that no student is better off through strategic manipulation over the objects that are better than their assigned school. Second, we use the notion that a matching is less unfair if it yields a smaller set of students whose priorities are violated, and define minimal unfairness accordingly. We then show that the Efficiency Adjusted Deferred Acceptance (EADA) mechanism is minimally unfair in the class of efficient and upper-manipulation-proof mechanisms. When the objective is to improve students' welfare over the SOSM, this characterization implies an important insight on the frontier of the main axioms in school choice.
Can proximity make friendships more diverse? To address this question, we propose a learning-driven friendship formation model to study how proximity and similarity influence the likelihood of forming social connections. The model predicts that proximity affects more friendships between dissimilar than similar individuals, in opposition to a preference-driven version of the model. We use an experiment at selective boarding schools in Peru that generates random variation in the physical proximity between students to test these predictions. The empirical evidence is consistent with the learning model: while social networks exhibit homophily by academic achievement and poverty, proximity generates more diverse social connections.
Political Economy of Crisis Response, with Konstantin Sonin and Austin L. Wright.
Becker-Friedman Institute Working Paper No. 2020-68.
We oﬀer a model in which heterogeneous agents make individual decisions with negative external effects such as the extent of social distancing during pandemics. Because of the externality, the agents have different individual and political preferences over the policy response. Personally, they might prefer a low-level response, yet would vote for a higher one because it deters the others – even if simultaneously decreasing their personal benefits. The effect is even more pronounced in information acquisition: agents would want one level of slant in the information they base their actions on and a different level of slant in public announcements. The model accounts for numerous empirical regularities of the public response to COVID-19.
How do market opportunities influence the formation and development of long-term relationships? To answer this question, I build a model of employment relationships where the worker has private information about match quality, the firm learns about match quality over time, and the firm makes a match-specific investment. Improved market opportunities for workers promote productive relationships because they let the worker signal her firm-specific productivity by forgoing market opportunities. Signaling allows the firm to bypass the learning stage and encourages investment (signaling effect). Improved market opportunities for firms, however, discourage long-term relationships and undermine investment incentives (layoffs effect). I embed the relationship game in a search market equilibrium where market opportunities for both parties depend on search frictions and market thickness. With intermediate values of market thickness, relationship productivity and worker welfare are u-shaped in search frictions: when search frictions decrease from high to intermediate levels, the layoffs effect dominates; when search frictions are sufficiently low, the signaling effect dominates.