Julius Silver Professor, Faculty of Arts and Science, and
Professor of Economics, New York University

Co-Editor, American Economic Review
Research Associate, NBER
Part-Time Professor, University of Warwick
Council Member, Game Theory Society
Research Fellow, CESifo
Board Member, BREAD and ThReD
Researcher in Residence, ESOP

Department of EconomicsNYU, 19 West 4th Street
New York, NY 10012, U.S.A.
debraj.ray@nyu.edu, +1 (212)-998-8906.

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Three Randomly Selected Papers
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Anatomy of a Contract Change

with Rajshri Jayaraman and Francis de Vericourt, American Economic Review 106, 316-358, 2016Online Appendix.

SummaryWe 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. 

Implications of an Economic Theory of Conflict: Hindu-Muslim Violence in India

(with Anirban Mitra), Journal of Political Economy 122, 719-765, 2014.

Summary. We model intergroup conflict driven by economic changes within groups. We show that if group incomes are low, increasing group incomes raises violence against that group and lowers violence generated by it. We then apply the model to data on Hindu-Muslim violence in India. Our main result is that an increase in per capita Muslim expenditures generates a large and significant increase in future religious conflict. An increase in Hindu expenditures has a negative or no effect. These findings speak to the origins of Hindu-Muslim violence in post-Independence India. Online Appendix. Sequel.

Games of Love and Hate

(with Rajiv Vohra), March 2019, forthcoming, Journal of Political Economy.

Dedicated to Tapan Mitra — advisor, colleague and dear friend, whose sense of aesthetics, minimalism and rigor has been an inspiration to us. Tapan Mitra died on February 3, 2019.

Summary. A strategic situation with payoff-based externalities is one in which a player’s payoff is a function of her own action and the payoffs of other players. Every action profile therefore induces an interdependent utility system. A strategic situation is continuous if each such utility system is continuous. If each utility system is bounded, with a unique payoff solution for every action profile, we call the strategic situation coherent, and if the same condition also applies to every subset of players, we call the situation sub-coherent. A coherent, sub-coherent and continuous situation generates a standard normal form, referred to as a game of love and hate. Our central theorem states that every equilibrium of a game of love and hate is Pareto optimal, in sharp contrast to the general prevalence of inefficient equilibria in the presence of externalities. While externalities are restricted to flow only through payoffs there are no other constraints: they could be positive or negative, or of varying sign. We further show that our coherence, sub-coherence and continuity requirements are tight.