Using a matching theory perspective, I analyze the extent to which existing and alternative Indian Civil Service state assignment mechanisms can yield balance across three dimensions of interest: quality, embeddedness, and quota. I find that a recent change in the matching mechanism in 2008 has systematically skewed assignments by assigning relatively poor quality bureaucrats to disadvantaged states: regions with external foreign conflict, states with internal political strife, and newly-formed states. This paper i) analyzes the causes of these imbalances, ii) assesses the impact of this mechanism change on state capacity, development outcomes, and bureaucratic performance, and iii) highlights trade-offs in implementing alternate mechanisms. Global balance in quality across states is a unique constraint which arises when applying matching to political economy settings, as the mechanism designer is a paternalistic central planner. Thus, less is left to the market compared to most canonical matching applications. On the other hand, the use of matching in political economy is also novel, and careful understanding of how different matching mechanisms address underlying correlations in the data has far-reaching consequences for bureaucratic performance and development outcomes.
PhD Program, Political Economy
PhD Program Office
Graduate School of Business
655 Knight Way
Stanford, CA 94305
My research uses tools from market design, matching theory, and game theory to study institutional design in development, political economy, labor, and finance.
The allocation procedure of All-India Services’ officers to states is an important aspect of personnel administration in the public sector. This article shows that a change in allocation policy in 2008 resulted in lower quality officers being systematically assigned to disadvantaged states. It examines the causes of these imbalances and impact on State capacity and development outcomes, and explores alternate mechanisms.
I analyze the assignment mechanisms used by the political parties in the US Senate to match their members to legislative committees from a matching theory perspective: one-sided, many-to-many matching with existing tenants. Understanding the data-generating process through detailed analysis of committee assignment procedures is crucial, but under-appreciated in the literature. I find that Republicans and Democrats use two distinct matching mechanisms creating very different strategic incentives, and analyze the theoretical and empirical implications of these organizational procedures. First, foundational theories of committee assignments must be re-evaluated in light of the constraints and induced strategic considerations of the two mechanisms. Second, my findings inform how to parse data for well-grounded empirical analysis by exploiting marked differences in strategyproofness which these mechanisms induce, both across parties and across seniorities within party. Lastly, I derive testable predictions from matching theory and present suggestive empirical tests highlighting the strategic intricacies of the assignment process.
We explore how the signaling by waiting mechanism functions to overcome adverse selection in a multi-period market, where asset qualities differ in their per-period probability of default. In this novel dynamic adverse selection environment, we begin to consider the impact of partitioning the market by quality with stress tests or rating agencies, and evaluate the relative costs, dynamics, and efficacy of various government intervention policies: changing interest rates, quantitative easing, bailouts, and asset purchases. Although focusing solely on the market with uniformly distributed qualities, we characterize the optimal method and timing of government interventions in response to a market freeze, and discuss the trade-offs and driving forces of the model which we hope to generalize.
We analyze continuous time optimal contracting in principal multi-agent moral hazard settings; particularly, what the implications are as the number of agents increases in the model. Using tools from game theory and stochastic optimal control, we derive the optimal, history-contingent contract for the generalized principal n-agent dynamic problem; in the process showing how continuous time framework makes dynamic contracting and analysis tractable. Efficiency gain from specialization and rising disincentives from increased moral hazard counteract one another as we increase the number of agents in our model, thus, we derive the optimal size of a firm/team (microeconomics application) or of a fiscal union (political economy application). Furthermore, our model suggests that development of strong political and economic institutions goes hand-in-hand with greater delegation of responsibility, decentralization, and federalism.
Existing literature shows that it is possible for rational players to establish one-sided and two-sided reputation in a bilateral bargaining environment by mimicking irrational, “r-insistent” players, and that this reputation build-up can drastically change the Rubinstein (1982) outcome, by causing delay in reaching agreement. Furthermore, the literature on outside options in bilateral bargaining suggests that unless outside options are very large, they do not affect these bargaining outcomes. We are interested in the impact on the bargaining outcome from endogenizing outside options---namely, bargaining in markets. In the presence of competition in decentralized search markets, can rational agents mimic irrationality to build reputation, when can irrational types on both sides of the market trade in equilibrium, and what are the consequences for delay and efficiency? We develop discrete, hybrid and continuous-time models of bargaining in markets with and without irrational types by combining reputational bargaining of Abreu and Gul (2000) with a continuous-time version of the Rubinstein and Wolinsky (1985) model of bargaining in markets. Applications include decentralized search markets for labor, exotic assets, over-the-counter securities, venture capital funding, and repurchase agreements.
Work in Progress
I develop a new concept of institutional stability which is particularly relevant for applications of matching theory in political economy, where the choice of the institution (i.e., the matching mechanism) is chosen and agreed upon by the very people who are assigned by the allocation procedure. In such settings, a natural question arises: when would the choice of the matching mechanism be institutionally stable? In other words, in what environments would the set of agents being assigned prefer or vote in favor of the allocation the existing matching mechanism delivers or any an alternative mechanism/allocation. This is a generalization of social choice to what I call a social allocation choice problem. I discuss a variety of voting rules (plurality, majority, and unanimity) and their stability counterparts in matching theory (popular matching, majority stability, and pareto efficiency). The novel property of majority stability is introduced, which is more relevant in practice, i.e., for considering stability in majoritarian institutions such as the US Senate. I find that certain mechanisms commonly used in practice, such as Serial Dictatorship, are surprisingly robust to highly correlated preferences, especially in comparison to popular matching, which places highly restrictive requirements on preferences of individuals and details of the assignment procedures. Unlike traditional social choice, where stability is undermined by cycles in preferences, in this application, I show that chains of envy undermine stability. Chains of envy are crucial to overcome the packing problem which arises in making a majority strictly better off under an alternative allocation. While correlation across agents' preferences helps stability in traditional by making cycles less prevalent, in my setting, higher correlation across agents' preferences leads to a higher likelihood of chains of envy, thereby undermining institutional stability.
We show how differences in institutional and contractual design might explain the differences in ease of accountability and monitoring of public servants across various civil service agencies. In federal system, a politician at the federal and provincial level might only be able to contract with bureaucrats at their respective levels. In such a multi-principal, multi-agent setting if both principals care about a single outcome that reflects combined efforts of both agents, the best possible contract between the principals and their respective agents leads to suboptimal outcomes. This contract would make monitoring agents harder by obscuring measurement of bureaucratic productivity by econometricians, exposing the bureaucracy to political turnover. The central argument made in the paper is that the problem of measuring bureaucratic productivity need not arise only due to noise, but also due to the institutional structure. We argue that in the Indian bureaucracy, this makes it possible for Indian Administrative Services (IAS) officers to better avoid accountability compared to officers of the Indian Police Services (IPS).
Last Updated 26 Jun 2019