Social and Economic Networks
PhD in Economics, Stanford University, 2016
(Advisor: Matthew Jackson)
MA and BA in Economics, BS in Mathematics, Peking University
Who Shares Risk with Whom and How? Endogenous Matching and Selection of Risk Sharing Equilibria
- presented in Stanford, Cambridge, Johns Hopkins, Peking U, HKU, CUHK
I examine a model in which agents first form risk-sharing pairs, and then repeatedly share income risks under limited commitment. Agents of different occupations differ in income autocorrelations, i.e. how their current incomes correlate with past ones. I show that agents with high autocorrelation are hard to share risks with. With endogenous matching, two equilibrium outcomes can occur:
either 1) agents match positive assortatively, or 2) agents from different occupations do match together, but in order to sustain such matches, agents share risks unevenly favoring the relatively less autocorrelated.
Either equilibrium features substantial inequality across occupations and low total welfare, compared to what would happen if a social planner could impose an optimal matching to agents.
The interplay between matching and risk sharing can change our views on policies.
For instance, uniform increases in everyone's low income levels (minimal wages) may hurt some agents. Increases in occupation-specific common income shocks could improve overall risk sharing and reduce inequality.
My results also apply to forms of heterogeneity other than income autocorrelations, such as heterogeneous opportunities to rematch or migrate.
A Theory of Efficient Negotiations
(with Matthew Jackson
and Hugo Sonnenschein
- presented in Decentralization Conference 2014, Chicago, Princeton, Yale.
Negotiation involves determining not only the price of an agreement, but also its content, which typically has many aspects. We model such negotiations and provide conditions under which negotiation will lead to efficient outcomes, even in the face of substantial asymmetric information regarding the valuation of each aspect. Even with substantial asymmetric information, the overall maximum surplus can be well-known. When this holds, and the language of communication is sufficiently rich, then
negotiation leads the agents to efficient agreements. Furthermore, no “planner” or “mechanism designer” who knows the statistical dispersion of information is required. The theory and examples explore the anatomy of negotiation and may shed light on why many situations with significant asymmetric information exhibit little inefficiency.
(with Anqi Li
, updated October 2016
- presented in AEA 2014, ES Summer Meeting 2015, SED 2015, Michigan, UPenn, Stanford.
Many real-world problems like sales, taxation and health care regulation, fea- ture the interactions between a principal, one or more intermediaries and agents with hidden characteristics. In these problems, intermediaries can specify the full menu of the multi-faceted consumption bundles that they offer to agents, whereas the principal is limited to regulating some but not all aspects of the bundles that agents consume, due to legal, information and administrative bar- riers. We examine how the principal can implement in these situations any target social choice rule that is incentive compatible, individually rational and feasible among agents. We show that when intermediaries have private values and are competitive, the principal’s goal can be achieved by imposing a per- unit fee schedule that yields intermediaries zero profit under the target social choice rule. When intermediaries have interdependent values or market power, per-unit fee schedule cannot generally be used to achieve the principal’s goal, whereas regulating the distribution of limited aspects of sold bundles can. We study the policy implications of these results.
Culture-dependent Strategies in Coordination Games (with Matthew Jackson), Proceedings of the National Academy of Sciences, Vol. 111:3, pp.10889-10896, 2014
Ordering Sellers in Sequential Auctions (with Qiang Gong and Xu Tan), Review of Economic Design, Vol. 18.1, pp.11-35, 2013
Auctions with both common-value and private-value bidders (with Xu Tan), Economics Letters, Vol. 111.1, pp.99-103, 2011
Other Publications, Book Chapters, etc.|
'Wave Phenomena' and Formation of Excess Capacity (with Justin Yifu Lin and Ho-Mou Wu), Economic Research Journal (in Chinese), Vol. 10, pp.4-19, 2011
Status quo, History and Thoughts on House Site, as Chapter 4 in The Road to Property Rights Delineation: Experience of Chengdu, China, Peking University Press, 2010
Research in Progress|
Multiplex Analysis of Indian Village Social Networks: When Does One Relationship Predict Another (with Chen Cheng)
Excessive Diversification and Endogenous Riskiness in Financial Networks
Optimal Ordering in Sequential Auctions with Forward-looking Bidders (with Xin Jin and Fanqi Shi)
Stable Networks with Local Social Rankings
A Screening Perspective on China's Experimental Reform (with Chen Cheng)
Adverse Selection with Time-Inconsistent Agents (with Anqi Li)