1. Interpersonal Relations, Indirect Reciprocity and Trust: An Experimental Study
with Juanjuan Meng, 2013, Journal of World Economy (in Chinese), No. 12, 90-110.
I study the optimal design of delegation rule when a principal has to delegate to an informed agent via a strategic intermediary. I show that when the subordinates have opposing biases, the optimal delegation set will involve a "hole": some modest options are precluded. This may shed some new lights on policy threshold effects: small changes in the underlying state cause large policy responses.
3. Exit and Voice: A Game-Theoretic Analysis of Customer Complaint Management
2013, Pacific Economic Review, Vol. 18, 177-207.
This work uses mechanism design theory to investigate business management problem. Motivated by the evidences from marketing research, using a multiagent-principal communication game model with voluntary participation constraint, I analyze how to design a mechanism that elicits and aggregates information from informed, strategic consumers, and retains customer base. The model predicts low complaint/dissatisfaction ratio, costly complaint, weak relationship between complaints and objective failure, and a variety of complaint management strategies, which are largely in line with the empirical findings.
4. The Optimal Sequential Delegation in Multiple tier Hierarchy and the “Cut-off” Policy
2012, China Economic Quarterly (in Chinese), Vol. 12, pp. 29-46.
Contributions to books
Decentrlization and Military Coups (with Ruixue Jia), 2012, Chen Bo, Manas Chatterji, Hou Na (Eds.) Contributions to Conflict Management, Peace Economics and Development: Cooperation for a Peaceful and Sustainable World, Part 1:: Vol. 20:: London: Emerald Publisher, pp 149-170.
With Hatred From Clients: On Optimal Feedback Management
I extend the previous work in some important dimensions. In equilibrium the meaning of message is endogenous, silent Clients are satisfied ones. Big company may completely ignore the Voices from customers and respond only to competition, to avoid the expenditure on eliciting feedback. However, this policy would not be feasible ex post if company cannot commit to a decision rule. Therefore I provide a strong rationale for customer relationship management.
Transfer of Authority within Hierarchies
This paper highlights the distribution of decision-making responsibility within a stylized principal/intermediary/expert hierarchy. The principal could delegate authority only one level lower to a biased uninformed intermediary, then the latter could further delegate to the informed expert. We characterized the delegation outcomes according to the subordinates' biases. Results showed that when the intermediary's personal interest was between the principal's and the expert's, by restricting the delegation set delievered to the intermediary, the principal could attain the best outcome as if she contracted directly with the expert. The implications for recruitment policies, job contents and promotion decisions were explored. A loyal agent may be assigned to the lower position. If the minister cannot find out each subordinate's bias, she may delegate the task to a properly biased intermediary who can in turn observe the expert's bias.
Government Structure and Military Coups (joint with Ruixue Jia)
We develop a multi-period contest model to formulate the role of the power structure of government in the outbreaks and outcomes of coups. In our model, the coup plotter in the army decides whether to carry out a coup, the central government responds by combating the plotter, and the local government chooses whether to confront the military government after a successful coup. A highly centralized government has more resources to defend itself against a coup, but it also constitutes an ample prize for the coup plotter conditional on the success of the latter. Consequently, the model predicts that more decentralized countries would have a shorter regime of military governments. Moreover, the relationship between decentralization and coup risk is non-monotonic. Empirical evidence from cross-country data provides support for the model.
Love Me, Love My Dog: An Experimental Study on Social Connections and Indirect Reciprocity (joint with Juanjuan Meng)
Favor Transmission under Social Image Concerns: An Experimental Study (joint with Juanjuan Meng)Some old stuff
Party Politics and Democratic Revolution (2007)
Using an asymmetric global game model, I investigate the role of ex post political institutions on coordination behavior against autocracy, which is denoted as democratic revolution. The diversity of revolutionin is characterized as equilibrium outcomes under different parameters, The novel predictions of model are applied to explain the cases of students movement and the revolutionary wave in 1989.
Overconfidence and Leader Selection Under Uncertainty (2006)
This paper explores the role of overconfidence on leader selection in a team-production setting where players have the preference to match effort with peers and different beliefs about outcome. Overconfidence player should be selected as leader, and his position could be consolidated at the loss of self-assessment of follower.