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This paper studies learning based on information obtained through social or professional networks. Building on the framework first proposed by DeGroot (1974), agents repeatedly update their beliefs by weighting the information acquired from their peers. The innovation lies in the introduction of dynamically updated weights. This allows agents to weight a contact with poor information little at first, but more later on, if that contact has in the meantime gathered better information from other, more knowledgeable agents. The main finding is that individuals' social influence will depend on both their popularity (as captured by eigenvector centrality) and their expertise (as captured by information precision) in a simple and intuitively appealing way. It is moreover shown that even completely uninformed agents can contribute to social learning, and that under some network structures, providing certain agents with better information could actually lead society to worse assessments. The paper also studies how the relationship between expertise and popularity in a network affects the learning process.
Conformism under incomplete information
with Marc Sommer (U Zurich) and Yves Zenou (Monash U)
As a large body of literature in sociology and economics has shown, social interaction induces conformism, since behaviours deviating from the social norm tend to be punished. Although conformism has been studied in a network setup before, this is one of the first papers to examine conformism under incomplete information, and the first to study its implications for outcomes and welfare, using a comprehensive theoretical framework. Social interaction is modelled as a Bayesian network game, which is the natural setup for analysing decisions whose potential returns or costs are ex ante uncertain (e.g. education, crime). We establish existence and uniqueness of the equilibrium, characterise the optimal decisions, and examine conditions under which policy interventions can be welfare-improving.
Lobbies, experts, and the public: a network model of political influence
Recent research suggests that interpersonal and social networks play an important role in shaping political opinions. This paper studies the evolution of political beliefs using a network model of social learning. Agents communicate their information, discuss their opinions with their peers, and update their beliefs accordingly. Although information originating from better-informed agents receives ceteris paribus a larger weight, individuals filter incoming information based on their political ideology. The paper also studies networks with individuals or groups of individuals who are not interested in learning or exchanging of information, but rather in promoting their own views to other agents. The features that make such groups influential are identified and discussed.
WORK IN PROGRESS
Debt relief and moral hazard: estimating the effect of bankruptcy protection on loan repayment
with Theresa Kuchler (NYU), Sharada Shridhar (NYU), and Constantine Yannelis (U Chicago)
Personal bankruptcy provides households with insurance against adverse financial shocks, but at the same time induces moral hazard by alleviating the consequences of non-repayment. Taking advantage of the introduction of a comprehensive bankruptcy protection framework in Greece, we use a large data set of individual mortgages to estimate the effect of the new legislation on the loan repayment rate, and study its effect on repayment costs.
Nudges, networks and social preferences
with Ranjula Bali Swain (Stockholm Sch of Econ), Erik Gråd (Södertörn U), and Shyam Ranganathan (Virginia Tech)
Nudges are interventions that steer individuals’ decisions without reducing their choice set or imposing additional costs on them. This paper proposes a general model of behavioural change in situations that can be classified as public goods games. We develop a model that takes social preferences into account, and examines how individual choices are affected by various types of nudges (informative, emotional, and social), and combinations thereof. We find conditions under which society converges to a uniform behaviour, and introduce a new centrality measure to identify the individuals that are more influential in inducing pro-social behaviour to their peers. Based on the proposed framework, experiments aimed at providing a deeper understanding of what drives individuals’ decisions related to the provision of public goods can be designed.
Political competition and parties' ability to influence their candidates' platforms
In primary elections, candidates running for their party's nomination face a dilemma: notwithstanding their personal views, appearing more partisan would foster their chances of getting nominated but could at the same time alienate moderate or independent voters in the forthcoming general election. In this paper it is shown that even within a probabilistic voting setting, which allows candidates some room for manoeuvring, primaries remain a quite effective mechanism for parties to discipline their prospective nominees on both sides of the party's ideological spectrum. This, however, is not always true for candidates with extremely radical views, who may hold on to their position, at the price of a reduced chance of winning the nomination.