(with Dilip Mookherjee) Journal of Globalization and Development 1, Article 3, 2010.
Summary. We study the intergenerational transmission of inequality using a model in which parents can make both financial and occupational bequests to their children. An equal steady state with high per capita skill can co-exist with unequal steady states with low per capita skill. We investigate dynamics starting from arbitrary initial conditions.
(with Dilip Mookherjee), American Economic Journal Microeconomics 2 38–76, 2010.
Summary. This paper studies income distribution in an economy with borrowing constraints. If the span of occupational investments is large, long-run wealth distributions display persistent inequality. With a “rich” set of occupations, so that training costs form an interval, the distribution is unique and the average return to education must rise with educational investment.
International Journal of Economic Theory 6 11–28, 2010.
Summary. The Phelps–Koopmans theorem states that if every limit point of a path of capital stocks exceeds the “golden rule,” then that path is inefficient: there is another feasible path from the same initial stock that provides at least as much consumption at every date and strictly more consumption at some date. I show that in a model with nonconvex technologies and preferences, the theorem is false in a strong sense. Not only can there be efficient paths with capital stocks forever above and bounded away from a unique golden rule, such paths can also be optimal under the infinite discounted sum of a one-period utility function.
unpublished manuscript, June 2009.
Summary. This paper studies costly conflict in a world of complete information, in which society can commit to divisible transfers among all potentially warring groups. The difficulty in preventing conflict arises from the possibility that there may be several conflictual divisions of society, each based on a different marker, such as class, geography, religion, or ethnicity. It is shown that this diversity of societal markers is particularly conducive to social instability when potential conflict is over private, divisible resources. In contrast, when conflict is over public goods, such diversity promotes social stability.
This book is now open access! Click the image or the title to download a free electronic copy, and if you like it, please buy the print version.
New York: Oxford University Press, 2008.
(with Francis Bloch and Garance Genicot), Journal of Economic Theory 143, 36-58, 2008.
Summary. This paper studies bilateral insurance schemes across networks of individuals. We investigate the structure of self-enforcing insurance networks. Network links play two distinct and possibly conflictual roles. They act as conduits for both transfers and information; affecting the scope for insurance and the severity of punishments upon noncompliance. Their interaction leads to a characterization of stable networks as suitably “sparse” networks. Thickly and thinly connected networks tend to be stable, whereas intermediate degrees of connectedness jeopardize stability.
(with Joan Esteban), American Economic Review 98:5, 2185–2202, 2008. Online Appendix.
Summary. “In much of Asia and Africa, it is only modest hyperbole to assert that the Marxian prophecy has had an ethnic fulfillment.” — Donald Horowitz (1985).
(with Joan Esteban), Journal of Peace Research 45, 163-182, 2008.
Summary. We provide a theoretical framework that distinguishes between the occurrence of conflict and its severity, and clarifies the role of polarization and fractionalization in each of these cases.
(with Dilip Mookherjee), Economic Record 84, S2–S16, 2008.
Summary. We compare the long-run (steady state) effects of replacing unconditional transfers to the poor by transfers conditional on education of children. Conditional transfers (funded by taxes on earnings of the skilled) are shown to generate higher long run output per capita and higher (utilitarian and Rawlsian) welfare.
(with Kfir Eliaz and Ronny Razin), Journal of Economic Theory 132, 236–273, 2007.
Summary. A model of group decision-making is studied, in which one of two alternatives must be chosen. Our model is distinguished by three features: private information regarding valuations, differing intensities in preferences, and the option to declare neutrality to avoid disagreement. There is always an equilibrium in which the majority is more aggressive in pushing its alternative, thus enforcing their will via both numbers and voice. However, under general conditions an aggressive minority equilibrium inevitably makes an appearance, provided that the group is large enough. Such equilibria invariably display a “tyranny of the minority”: the increased aggression of the minority always outweighs their smaller number, leading to the minority outcome being implemented with larger probability than the majority alternative.