(with Garance Genicot), Review of Economic Studies 70, 87-113, 2003.
Summary. We study informal insurance within communities, explicitly recognizing the possibility that subgroups of individuals may destabilize insurance arrangements among the larger group. We therefore consider self-enforcing risk-sharing agreements that are robust not only to single-person deviations but also to potential deviations by subgroups. Variant on an Example in the paper. A conjecture related to the paper.
with Rajshri Jayaraman and Francis de Vericourt, American Economic Review 106, 316-358, 2016. Online Appendix.
Summary. We study a contract change for tea pluckers. Base wages increased while incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20–80%. This response contradicts the standard model, is only partly explicable by greater supervision, and appears to be “behavioral.” But in subsequent months, the increase is comprehensively reversed. Our findings suggest that behavioral responses may be ephemeral, and should ideally be tracked over an extended period.
(with Rajiv Vohra). April 2025. Supplementary Notes.
Summary. We revisit Nash’s axiomatic approach to bargaining when both individuals and coalitions of individuals have outside options. As in Nash, our solution maximizes a (possibly weighted) product of payoffs net of individual disagreements, but coalitional threats appear as conventional constraints that are not netted out. We embed this solution into a setting with cross-coalitional externalities, and develop a “Nash-in-Nash” theory of viable coalitional structures. Every coalition follows its coalitional Nash solution but interacts noncooperatively with other coalitions, leading to a recursive determination of both threats and solutions. We discuss applications to public goods provision, R&D coalitions, and cartels in oligopolistic competition. Finally, for transferable utility characteristic functions, we connect the coalitional Nash solution to a notion of “pragmatic egalitarianism.”