Title: Campaigning Against Populism: Emotional and Informational Messaging in Real Campaigns, with Cesi Cruz (UCLA) and Francesco Trebbi (Berkeley)

Title: Simulated Maximum Likelihood Estimation of Large Games using Scenarios". This is joint work with Andrin Pelican.

Abstract: This paper introduces a new simulation algorithm for evaluating the

log-likelihood and score functions associated with a class of supermodular
complete information discrete games. The algorithm allows for payoff
function estimation in games with large numbers of players and/or
many binary actions per player (e.g., games with tens of thousands
of strategic binary actions). In such cases the likelihood of the
observed pure strategy combination may be (i) very small and (ii)
a high dimensional integral with a complex integration region. Direct
numerical integration, as well as accept-reject Monte Carlo integration,
are computationally impractical in such settings. In contrast, our
method allows for accurate likelihood simulation with modest numbers
of simulation draws. Use cases include simulated maximum likelihood
(SML) parameter estimation in models of technology adoption, peer
effects, and strategic network formation.

Title of paper: The Long-Run Development Impacts of Agricultural Productivity Gains: Evidence from Irrigation Canals in India

Abstract: How do investments in agricultural productivity translate into development and structural transformation? We estimate the long-run impacts of India's irrigation canals, which span 300,000+ km and deliver water to 130,000+ villages. Drawing on high-resolution data on every household, firm, village, and town in India, we use three empirical strategies to characterize the direct and spillover effects of large increases in agricultural productivity. Our findings are consistent with a spatial equilibrium model in which labor is mobile, and urban areas have non-farm productivity advantages. In the long run, areas directly treated by canal irrigation have sharply higher agricultural productivity and population density, but similar non-farm employment shares to non-canal areas. Persistent consumption gains accrue only to landowners and structural transformation occurs almost, exclusively through the concentrated growth of regional towns. In the long run, the substantial productivity effects of canals were equilibrated through the movement of labor across space rather than within locations across sectors.

Title:Buying Opinions

 Abstract: A principal hires an agent to acquire soft information about an unknown state. Even though neither how the agent learns (the experiment chosen by the agent) nor what the agent discovers (the realization of the experiment) are contractible, the principal is unconstrained as to what information the agent can be induced to acquire and report honestly. When the agent is risk neutral, and a) is not asked to learn too much, b) can acquire information sufficiently cheaply, or c) can face sufficiently large penalties, the principal can attain the first-best outcome. Risk aversion (by the agent) introduces inefficiencies: the first-best is unattainable, though whether the agent obtains rents depends on whether he may exit to take his outside option after learning.

Title: An Organizational Theory of State Capacity (with Mike Ting, Columbia)

Abstract: A burgeoning literature recognizes that the efficacy of the state is crucial for economic growth and citizen welfare. However, much of that literature abstracts away from the institutional details underlying state capacity. We develop a theory that provides a working definition of state capacity---the ability to handle administrative problems of varying complexity, such as tax collection---and how it is provided and maintained. We conceive of the state as a knowledge hierarchy, or an information-processing institution that passes problems up a set of organizational layers until a layer with the required expertise solves it. Knowledge hierarchies are costly to establish and operate, and politicians differ in policy preferences and public goods valuations. We embed this structure in a simple political economy framework, where politicians may idle parts of the state depending on electoral prospects, thus reducing output. In conjunction with high partisanship, this gives the state designer incentives to distort the state away from efficient levels of capacity and specialization.

Title: Labor Market Power, Self-Employment, and Development

Nonparametric identification of first-price auction with unobserved competition: a density discontinuity framework (joint with Yao Luo (University of Toronto))

Abstract: We consider nonparametric identification of independent private value first-price auction models, in which the analyst only observes winning bids. Our benchmark model assumes an exogenous number of bidders N. We show that, if the bidders observe N, the resulting discontinuities in the winning bid density can be used to identify the distribution of N. The private value distribution can be nonparametrically identified in a second step.

This extends, under testable identification conditions, to the case where N is a number of potential buyers, who bid with some unknown probability. Identification also holds in presence of additive unobserved heterogeneity drawn from some parametric distributions. A last class of extensions deals with cartels which can change size across auctions due to varying bidder cartel membership. Identification still holds if the econometrician observes winner identities and winning bids, provided a (unknown) bidder is always a cartel member. The cartel participation probabilities of other bidders can also be identified. An application to USFS timber auction data illustrates the usefulness of discontinuities to analyze bidder participation.

The paper can be find here: https://arxiv.org/pdf/1908.05476.pdf

Title: Female representation and talent allocation in entrepreneurship: the role of early exposure to entrepreneurs

Abstract: Women are highly under-represented in entrepreneurship in all OECD countries, raising concerns both from a gender equality and an aggregate productivity perspective. Using registry data from Denmark, we follow one million individuals from adolescence into adulthood to study whether higher exposure to entrepreneurs during adolescence can improve female representation and talent allocation in entrepreneurship. We exploit within-school, across-cohort variation in adolescents' exposure to entrepreneurship, as measured by the share of their peers whose parents are entrepreneurs during the last years of compulsory schooling. We find that higher exposure to entrepreneurs during adolescence encourages girls' entry and tenure into this profession. The effect is driven by exposure to the parents of female peers and works via a decrease in girls' likelihood to discontinue education at the end of compulsory schooling and to hold low-paying jobs as adults. The increase in female entrepreneurship is associated with the creation of firms that are larger and survive for longer than the average firm, indicating that early exposure improves the allocation of talent in entrepreneurship by reducing women's entry barriers to this profession. Our results suggest that such barriers are both cultural and informational in nature and that raising women's early exposure to entrepreneurship from the 25th to the 75th percentile would increase the total number of jobs created by entrepreneurs by 5.3%.

Title to be advised

Organised by Subhasish Dey

Title: Optimal Insurance: Dual Utility, Random Losses and Adverse Selection (joint with Alex Gershkov, Benny Moldovanu and Philipp Strack)

Abstract: We study a generalization of the classical monopoly insurance problem under adverse selection where we allow for a random distribution of losses, possibly correlated with the agent's risk parameter that is private information. Our main purpose is to provide a convenient analytical model that explains both the pattern of observed customer behavior and the pattern of insurance contracts most often observed in practice: these consist of menus of several deductible-premium pairs, or menus of insurance with coverage limits- premium pairs. The main departure from the classical insurance literature is obtained here by endowing the agents with risk-averse preferences that can be represented by a dual utility functional.

Title: The Politicization of Bureaucrats: Evidence from Brazil ​(with Rogerio Santarrosa)

Abstract: In developing countries incumbents commonly exercise political influence over bureaucrats through monitoring or patronage hiring. We investigate a new politicization channel: a phenomenon where bureaucrats join political parties while in office. First, with a regression discontinuity design and administrative data on the universe of Brazilian municipal bureaucrats, we identify an incumbency advantage in their politicization. Second, we find larger effects for a special set of bureaucrats: 55,000 interviewers enrolling households into Bolsa Família (BF). Third, we show that these effects are even stronger for interviewers highly exposed to voters; in municipalities where BF was expanded; and in administrations connected to PT’s federal government, BF’s creator. The Brazilian context and this evidence together suggest that the following logic might drive this politicization: policy‐driven interactions with voters allow bureaucrats to accumulate political capital – either due to good performance or capture – which is converted into rents by joining the incumbent political networks.

Title: (Endogenous) Growth Slowdowns

Abstract: We present a model where temporary shocks can lead to permanent changes in the rate of growth of total factor productivity (TFP). The model features matching between basic research and development within an expanding variety semi-endogenous growth model. Search externalities generate vicious and virtuous research cycles. The model has a unique equilibrium path but multiple balanced growth paths (BGPs). After a long-lived or deep financial shock, the economy can transit between these BGPs, generating “super-hysteresis” in TFP. We analyze the model in the context of the Japanese growth slowdown and show that it can explain almost all of the TFP growth decline after the financial crisis in the early 1990s. Demographic shocks combined with a long-lasting financial crisis proved to be the “wretched coincidence” that led to the growth slowdown.

Title: Relaxing Strict Exogeneity in Nonlinear Panel Data Models, joint with Kevin Dano and Bryan Graham

Title: Understanding Engagement and Performance of Social Mobility Students

Speaker: Lory Barile, Neil Lloyd and Ramkumar Govindaswamy

Abstract: One of the guiding principles to inclusive education is to improve participation and outcomes for all students and ensure that all students are able to achieve their potential. Effective data monitoring is key to this and to ensure that change is transformative and sustained. This study extends the existing literature on ‘mobilities in Higher Education ’ by looking at the extent to which Economics students from social mobility backgrounds at the University of Warwick engage and perform within their programme of studies. The paper will provide a contribution to the literature by:

1) Analysing the relationship between student engagement and performance using a Revealed Preferences Approach and considering a) how students’ characteristics (e.g., socioeconomic and pre-university performance) affect students’ (online and in-person) engagement and b) how this links to students’ performance.

2) Investigating how different types of assessments (e.g., MCQ, Essays, Group tasks) impact engagement and performance.

Organised by Subhasish Dey

Title: Martingale Embeddings: Theory and Applications.

Who Benefits from Meritocracy? (with Santiago Pérez)

Does screening applicants using exams help or hurt the chances of lower-SES candidates? Because individuals from lower socioeconomic backgrounds fare, on average, worse than those from richer backgrounds in standardized tests, a common concern with this “meritocratic” approach is that it might have a negative impact on the opportunities of lower-SES individuals.
However, an alternative view is that, even if such applicants underperformed on exams, other (potentially more discretionary and less impersonal) selection criteria might put them at an even worse disadvantage. We investigate this question using evidence from the 1883 Pendleton Act, a landmark reform in American history which introduced competitive exams to select
certain federal employees. Using newly assembled data on the socioeconomic backgrounds of government employees and a difference-in-differences strategy, we find that, although the reform increased the representation of “educated outsiders” (individuals with high education but limited connections), it reduced the share of lower-SES individuals. This decline was driven by
a higher representation of the middle class, with little change in the representation of upper class applicants. The drop in the representation of lower-SES workers was stronger among applicants from states with more unequal access to schooling as well as in offices that relied more heavily on connections prior to the reform. These findings suggest that, although using
exams could help select more qualified candidates, these improvements can come with the cost of increased elitism.

This seminar will be hybrid format via MS Teams.

Click here to join the meeting<https://teams.microsoft.com/l/meetup-join/19%3ameeting_NjExOWVhZTAtNTY4MC00OWUwLWEyYWQtYTcxOGY3NmE1YzAy%40thread.v2/0?context=%7b%22Tid%22%3a%2209bacfbd-47ef-4465-9265-3546f2eaf6bc%22%2c%22Oid%22%3a%229f3e7b84-305e-496a-b9de-8c9ca74b3237%22%7d>

Title: to be advised

Christine Braun is hosting this visit.

Title: Omina Juncta in Uno: Foreign Powers and Trademark Protection in Shanghai's Concession Era (with Laura Alfaro, Cathy Bao, Maggie X. Chen, Junjie Hong)

Title: Noisy, Non-Smooth, Non-Convex Estimation of Moment Condition Models

Title: Taxing Property in Developing Countries: Theory and Evidence from Mexico

Title : Incentives for collective innovation

Abstract: Identical agents exert hidden effort to produce randomly-sized improvements in a technology they share. Their payoff flow grows as the technology develops, but so does the opportunity cost of effort, due to a resource trade-off between using and improving the technology. The game admits a unique strongly symmetric equilibrium, and it is Markov; that is, no form of punishment is sustainable. Moreover, in this equilibrium, small innovations may hurt all agents as they severely reduce effort. Allowing each agent to discard the innovations she produces (after observing their size) increases equilibrium effort and welfare. If agents can instead conceal innovations for a period of time, there exists an equilibrium in which improvements are refined in secret until they are sufficiently large, and progress stops after disclosure. Although concealment is inefficient due to forgone benefits and the risk of redundancy, under natural conditions, this equilibrium induces higher welfare than all equilibria with forced disclosure.

Weblink: https://arxiv.org/abs/2109.01885

Title: Politics Transformed? Electoral Competition under Ranked Choice Voting

 Abstract: We compare multi-candidate elections under plurality rule versus ranked choice voting (RCV). In our framework candidates choose whether to pursue a narrow campaign that targets their base, or instead pursue a broad campaign that can appeal to the entire electorate. We find that RCV generally intensifies candidates’ incentives to target their base at the expense of a broader appeal. We also unearth circumstances in which RCV increases the probability that a candidate who would lose any pairwise contest nonetheless wins a multi-candidate contest.

Title: Dream Jobs in a Globalized Economy: Wage Dynamics and International Experience.

Title: Firm Adaptation in Production Networks: Evidence from Extreme Weather Events in Pakistan (Joint with Johannes Boehm and Mazhar Waseem)

 Abstract - This paper considers how far private adaptation may reduce future vulnerability to climate

change. Firms’ climate risk exposure depends not only on the location of production, but also

on network effects via the flood risk profile of suppliers and transportation links connecting

trading partners. We use data on monthly firm-to-firm transactions for the near-universe of

formal sector manufacturing firms in Pakistan and more than six billion observations from

commercial trucks traveling on the road network from 2011 to 2018 to study adaptation of

firms in production networks. We find that firms affected by major floods relocate to less flood-prone

areas, diversify their supplier base, and shift the composition of their suppliers towards

those located in less flood-prone regions and reached via less flood-prone roads. Identification

strategies that exploit both firm- and route-level flooding suggest that these responses reflect

forward-looking actions to reduce future vulnerability to flood risk rather than direct effects of

flooding, and are consistent with experience-based Bayesian updating. The results suggest that

the impacts of climate change will be mediated as firms learn from the experience of increasingly

frequent climate disasters.

Title: AI-based formative feedback

Organised by Subhasish Dey

Title: Blackwell correlated equilibrium (joint with Doron Ravid).

Abstract: We develop a method for making robust predictions in games with flexible information acquisition (i.e., rational inattention, Sims 2003). In games with exogenous information, one can describe the set of attainable outcomes using the Bayes correlated equilibrium (BCE) concept (Bergemann and Morris 2016). We introduce a refinement of BCE, Blackwell correlated equilibrium (BKE), and prove that it spans all outcomes attainable under some flexible learning technology whose costs increase in Blackwell's (1951,1953) information order. We show the BKE set is either dense or nowhere dense in the BCE set, with the former being true for generic games. We also characterize the set of outcomes attainable under almost-free learning. We conclude by exploring the implications of BKE on a Bertrand competition game, where we show the best BCE for consumers may not be approximable by BKEs.

Title: Breaking invisible barriers: Does fast internet improve access to input markets? (joint with Beata Javorcik and Piyush Panigrahi)

Abstract: We combine rich data with theory to study how access to fast internet affects firm’s supplier network by facilitating doing business. By augmenting data on the quasi universe of firm-to-firm transactions with the information on the length of fibre optic internet cable in each of 81 province during 2012-2019, a period of large investments in internet infrastructure, we show that buyers increase their purchases from sellers with better internet connectivity. The effects of high-speed internet on buyers’ input purchases are stronger for initially concentrated input markets. Next, we present a tractable model of firm-to-firm connections to recover the key parameter of interest: the elasticity of firm-to-firm trade with respect to internet connectivity. The estimated elasticity is sizable across all sectors. In manufacturing and trade, the elasticity with respect to internet connectivity is of comparable magnitude with the elasticity with respect to travel time.

Organised by Subhasish Dey

Title to be advised

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Organised by Subhasish Dey