Ashutosh Thakur

My research uses tools from market design, matching theory, and game theory to study institutional design in development, political economy, labor, and finance.

Comments and suggestions are always appreciated!

****PUBLICATIONS****

** A Matching Theory Perspective on Legislative Organization: Assignment of Committees (Accepted, Political Science Research and Methods) [PDF]

- last updated September, 2024

Abstract: How legislatures allocate power and conduct business are central determinants of policy outcomes. This has long motivated a study of parties and their relationship with the committee system in legislatures. A focus of the literature has been which members serve on which committees. What has received less attention are the mechanisms by which parties allocate members to committees. I show in this paper that parties in the U.S. Senate use matching mechanisms, such as those often found in other contexts like school choice and the medical residency match. I identify that Republicans and Democrats use two distinct matching mechanisms such that canonical theories of parties cannot apply equally to them. The Republican mechanism is strategy-proof; whereas the Democrat mechanism incentivizes politicians to manipulate their reported preferences. Leveraging the tools of matching theory, I make theoretical predictions that I then corroborate with archival correspondence and committee requests/assignments data.

** Thakur, Ashutosh and Jonathan Bendor. ``Endogenous Reorganization: Status, Productivity & Meritocratic Dynamics.'' Journal of Economic Behavior and Organization, Volume 227. (2024) [link]

joint with Jonathan Bendor

- last updated September, 2024

Abstract: We model the dynamics of endogenous organizational assignments of people to positions where those being assigned positions can themselves lobby for who gets which position. Internal labor market changes depend on how much individuals value their personal status, organizational output, their friends' welfare, and the quality of their departmental colleagues. We show that an organization converges to the meritocratic, efficient assignment of people to positions by a combination of agents valuing organizational output and restrictions on the scale of reorganization. However, concentrated decision-making power, lax restrictions on agenda-setting protocols, certain friendship networks, and department/team structures can hinder such paths of reshuffling.

** "Design choices for implementing affirmative action." Ideas for India: e-Symposium on The Architecture of Affirmative Action Topics (December 12, 2022)

• [Direct link: https://www.ideasforindia.in/topics/governance/design-choices-for-implementing-affirmative-action.html]
  
  

• Hindi translation:
  "सकारात्मक कार्रवाई को लागू करने हेतु डिजाइन विकल्प" Ideas for India हिन्दी अनुभाग (April 6, 2023)

[Direct link: https://www.ideasforindia.in/topics/governance/design-choices-for-implementing-affirmative-action-hindi.html]

** "Rethinking cadre allocation procedures in civil services" Ideas for India: invited article (March 18, 2019)

• [Direct link: https://www.ideasforindia.in/topics/governance/rethinking-cadre-allocation-procedures-in-civil-services.html]

(Most Popular Governance Post on Ideas for India, 2019-2024)

** "Rethinking the design of cadre allocation procedures in civil services." Hindustan Times: invited article (August 1, 2019) 

[Direct link: https://www.hindustantimes.com/analysis/addressing-imbalances-in-cadre-allocation-procedures-in-civil-services/story-dezLXdf9RiWznjQCRprQEM.html]

** Dynamic model with signaling by waiting with private information and policy implications (UCLA Undergraduate Journal of Economics, 2014) [PDF]

Abstract: We try to understand how the signaling by wwaiting mechanism functions in a multi-period model to overcome adverse selection in markets. We then evaluate both the relative costs and the efficacy of various government intervention policies which affect the market outcome. 

Junior Paper, Princeton University Department of Economics (Advisor: Yuliy Sannikov)

****WORKING PAPERS****

** Matching in the Civil Service: A Market Design Approach to Public Administration and Development (R&R Journal of Public Economics) [PDF]

- last updated September, 2023

Abstract:  Using a matching theory perspective, I analyze the design and impact of Indian Civil Service state assignment mechanisms allocating elite civil servants to different parts of the country. I find that a 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. I highlight the scope for market design and the Preference-versus-Performance Trade-off governments face in designing allocation procedures: accommodating individuals' preferences to keep bureaucrats content, can come at a loss for the organization's performance as a whole.

a) "Rethinking cadre allocation procedures in civil services." Ideas for India: invited article (March 18, 2019)

[Direct link: https://www.ideasforindia.in/topics/governance/rethinking-cadre-allocation-procedures-in-civil-services.html]

(Most Popular Governance Post on Ideas for India, 2019-Present)

b) "Rethinking the design of cadre allocation procedures in civil services." Hindustan Times: invited article (August 1, 2019) 

[Direct link: https://www.hindustantimes.com/analysis/addressing-imbalances-in-cadre-allocation-procedures-in-civil-services/story-dezLXdf9RiWznjQCRprQEM.html]

** Endogenous Institutional Stability (working paper) [PDF]

- last updated February, 2024

Abstract:  Members of an organization need to be assigned to positions, e.g., legislators to committees, executives to roles, or workers to teams. This choice over allocations---and more broadly, the assignment procedure design---represents an institutional choice that is agreed upon by the very members being assigned. If a coalition of members can arise endogenously to bring about reform by voting in favor of some alternative allocation over their current allocation, the stability of such an institution is undermined. I explore this notion of institutional stability by bringing together matching theory and social choice. Correlation across agents’ preferences over positions generates envy and results in large coalitions for institutional change. I show that existence of institutional stability under majority rule is robust to moderately correlated preferences, in contrast to plurality rule (i.e., “popular matching”). Given the prevalence of (super-)majority rules, this suggests why we observe institutional stability in practice. 

** Evolution of Institutional Designs: All India Services (working paper) [PDF]

- last updated September, 2023

Abstract: In India, the allocation of elite civil servants to a particular state matters for that state's development and growth. So, when, how, and why are the institutions governing the allocation of elite civil servants reformed? In this paper, I endogenize the evolution of allocation procedures used to assign Indian Administrative, Police, and Forest Service officers to states across India post-Independence. Using detailed knowledge of the history of matching mechanisms and the civil servants' rank-order preferences, I highlight the constant struggle over allocation procedures between the Prime Minister and the civil service. The Prime Minister wants a more equitable distribution of bureaucratic quality across the country for balanced growth and development. Whereas the civil service wants more weight to be given to their own preferences over where to work. The aspirations of the executive and the bureaucracy remain at odds with one another because bureaucrats' preferences are correlated: avoiding lifelong assignments to underdeveloped areas and conflict zones. I find that over time the institutional pendulum swings between allocation procedures the Prime Minister favors and those that the bureaucracy favors, depending on the strength of the Prime Minister. Strong Prime Ministers (proxied by majority governments) can resist pressure from the bureaucracy. Thereby, they institute allocation procedures that achieve a more equitable balance of bureaucratic quality across the country, albeit by giving bureaucrats’ preferences less weight or restricting their ability to express certain types of preferences. On the other hand, weak Prime Ministers (proxied by coalition governments) are more prone to the bureaucracy’s pressure. In turn, they institute allocation procedures that give most bureaucrats more preferred assignments, though this comes at the expense of disadvantaged regions systematically receiving lower-quality bureaucrats.

** Continuous-time principal multi-agent problem: moral hazard in teams & fiscal federalism (working paper) [PDF]

Abstract: 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 show- ing how continuous time framework makes dynamic contracting and analysis tractable. Efficiency gain from specialization and rising disincentives from in- creased 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. 

Princeton University Applied and Computational Mathematics Department Independent Work- Advisor: Ronnie Sircar

** Market Freeze, Signling-by-waiting, and Optimal Government Interventions (working paper) [PDF]

Abstract: 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.

** Bargaining micro-foundations of decentralized markets, competition, and reputation (working paper) [PDF]

Abstract: 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. 

Princeton University Senior Thesis (May 2014)- Advisor: Dilip Abreu

** A Rating System for Dating Markets (in progress) 

joint with Ignacio Rios

Abstract: We propose a rating system for two-sided dating markets where i) men and women ratings lie on the same rating scale and ii) rating of an individual takes into account both the liking behavior and the ratings of the counterparties who are recommended their profile for evaluation. We find four uses of this dimension reduction exercise using this ELO-style rating system. First, incorporating ratings of counterparties in adjusting one's rating allows the platform to more efficiently use information and is an improvement over simple measures such as percentage likes amongst recommendations the platform has suggested. Second, assortative matching by recommending man-woman pairs closest in rating maximizes the expected number of matches on the platform. Third, for any individual i, using data from all N\i to compute i's estimated rating, and then using maximum-likelihood techniques to use i's liking behavior holding N\i ratings fixed to calculate his behavioral rating, allows detection of behavioral biases such as over-confidence. Lastly, the single-dimension rating system interacted with other covariates allows the platform to better identify which dimensions an individual behaves differently relative to their estimated rating: i.e., whether individual i's preference criterion are different for counterparties with same race, religion, hobbies, etc.

** Yes Minister: the problem of monitoring the bureaucracy (in progress) -joint with Vatsalya Srivastava

Abstract: 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. We find that relative to the optimal contract in a principal-agent, optimal contract in a federalist system with multiple principals who can only contract with their agent, but care about a single outcome which reflects the combined effort of multiple agents (as either substitutes or complements) leads to suboptimal outcomes, makes monitoring and bureaucratic accountability of agents harder, obscures outcome measurement of bureaucratic productivity by econometricians, and exposes bureaucratic monitoring to political turnover. The result is driven not by noise but by the institutional structure, and highlights how IAS---but not IPS---officers are able to hide behind and blame others, and hence cannot be easily monitored.

** Experimentation Under Unrealistic Ideals (in progress)

Abstract: I posit a behavioral extension to Callander (2011)'s model of learning and experimenting in search for good policies, which suggests why having an unrealistic ideal can lead to excessive experimentation. The decision maker, who holds incorrect beliefs of the set of feasible states of the world, can in equilibrium set an unattainably high standard for evaluating outcomes produced by policies. This implies over-experimentation, decreased stability of policies, extreme policy proposals, and a higher chance of negative outcomes. In building towards this result, I compare 3 other models: i) satisficing model with exogenously specified aspirations, ii) Callander (2011), and iii) aspiration-based model with incorrect beliefs. I show how ii) endogenously generates equilibrium standard-based evaluation similar to i) based on the complexity of the environment, and explains the dynamic evolution of standards. Analogously, my main model endogenizes the standard-based evaluation logic of iii). This discussion aims to provide a better understanding of different aspects of standard-based and comparative-based evaluations, exogenous versus endogenous standards and satisficing behavior, and shows that multiple models of decision-making---when interpreted as ``computation based on a representation''---can produce empirically and theoretically indistinguishable equilibrium dynamics. This arises from the computation dimension offsetting the representation dimension in the two classes of models.