Mars Leung - Projects

Backbench Rebellion - a Mechanism-design Approach

Working paper

Backbench rebellion refers to when members of the ruling party in a parliament vote against the will of their own party, despite a threat of disciplinary actions. A major motivation could be public pandering to improve the MP's re-election prospect, especially when the bill is unpopular among the constituents. This creates a tradeoff that the party leader must face: the punishment that discplines the MPs simultaneously strengthens the signalling effect of their rebellion. I present a model that takes a mechanism-design approach to formalise the notions of strategic rebellion, optimal whipping, and party loyalty.

A Bayesian Model of Altruistic Number Rating

Independent research for the MRes Economics degree at the LSE, June 2024

A decisionmaker must choose between their outside option and an object with unknown quality. They can access a review platform where altruistic raters sequentially leave number ratings about the object. The equilibrium rating strategies partition the quality space, so that the decisionmaker may roughly infer the quality. As ratings grow in number, communication is enriched by the averaging of individual ratings, facilitating finer partitions. This model gives novel predictions, namely rating non-monotonicity and comparative statics for rating leniency, which are overlooked by common modelling approaches in the literature.

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Demystifying Partitions: A Level-k Model of the Cheap-talk Game

Independent research for the MSc Economics degree at the LSE, May 2022

In this paper, I present a level-k model to capture the bounded rationality of players in the Crawford-Sobel cheap-talk game. The model gives sharp predictions regarding nonequilibrium strategies and the language used in messages sent, which are consistent with findings from past experiments in the literature. Along the rule hierarchy, partitioning behaviours emerge from signal jamming that hinders players from outguessing their opponents. I further show that the level-k model converges to the most informative partition equilibrium and welfare deteriorates as players adopt higher levels of iterated rationalizability.

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On the Relationship Between Economic Growth, Foreign Aid and Its Transmission Channels: Panel Evidence From 78 Developing and Underdeveloped Countries

Capstone Paper for the BEcon&Fin degree at the HKU, May 2020

with Terry Hiu-Hong Kwan and Henry Lik-Hang Tsoi

In this paper, we examine both the positive and negative transmission channels of foreign aid on economic growth. Though countless papers have been written to analyse the effects of aid on growth, the transmission channels have not been discussed fervently by researchers. We conduct our research on a panel dataset involving 78 developing and underdeveloped countries from 1960 to 2018, and dissect the effects of foreign aid into 6 main transmission channels. We conclude that foreign aid positively contributes to growth via investment, import and improvement in governance. It is entirely offset by its negative impacts via government expenditure and military expense.

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