See below for abstracts of all my completed papers.
Listen Before You Link: Optimal Monitoring Rules for Communication Networks, Games and Economic Behavior, May 2022, 133: 230-247. https://doi.org/10.1016/j.geb.2022.03.004
I consider environments where communication networks are endogenous, but monitoring rules enforce agents to ask consent from others to form new links or break their existing links. A monitoring rule consists of a number x and a collection of groups O such that each agent requires consent from x number of agents in every group he belongs to. First, I show that efficient networks can have at most a single component when externalities are positive, whereas they can have multiple components when externalities are negative. Second, I study monitoring rules that can stabilize efficient networks. I find that partitioning the set of agents into groups based on the components of the efficient network forms the “smallest groups” that can internalize all of the externalities; therefore, it can stabilize the efficient network with the minimum number of monitors. I relate this finding to the widespread adoption of “small work groups with few monitors” (like Quality Circles) by quality management programs to enhance communication between developers.
Keywords: Communication Networks, Organizations, Externalities, and Consents.
JEL Codes: D85, D62.
Targeting in Networks Under Costly Agreements, with Mohamed Belhaj and Frédéric Deroïan, Games and Economic Behavior, July 2023, 140: 154-172. https://doi.org/10.1016/j.geb.2023.03.003
We consider agents organized in an undirected network of local complementarities. A principal with a limited budget offers costly bilateral contracts in order to increase the sum of agents’ effort. We study excess-effort linear payment schemes, i.e. contracts rewarding effort in excess to the effort made in absence of principal. The analysis provides the following main insights. First, for all contracting costs, the optimal unit returns offered to every targeted agent are positive and generically heterogeneous. This heterogeneity is due to the presence of outsiders, who create asymmetric interaction between contracting agents. Second, when contracting costs are low, it is optimal to contract with everyone and optimal unit returns are identical for all agents. Third, when contracting costs are sufficiently high, it becomes optimal to target a subset of agents, and optimal targeting can lead to NP-hard problems. In particular, when the intensity of complementarities is sufficiently low, a correspondence is established between optimal targeting and the densest k subgraph problem. Overall, the optimal targeting problem involves a trade-off between centrality and budget spending — central agents are influential, but are also more budget-consuming. These considerations can lead the principal to not target central agents.
Keywords: Networked Synergies, Aggregate Effort, Optimal Group Targeting, Linear contract.
JEL Codes: C72, D85.