Publications
.Laboratories of Democracy: Policy Experimentation under Decentralization (with Christopher Li) AEJ: Micro Vol.11, Issue 3, August 2019
Moral Hazard in Teams with Subjective Evaluations The RAND Journal of Economics Vol. 52, Issue 1, Spring 2021
Variations in Governmental Responses to and the Diffusion of COVID-19: The Role of Political Decentralization (with Jiasheng Li and Chuanchuan Zhang) Frontier of Economics in China Vol. 16, Issue 4, December 2021
Which Networks Permit Stable Allocations? A Theory of Network-based Comparisons (with Yiqing Xing) Theoretical Economics Vol. 17, Issue 4, November 2022
A Screening Perspective on Experimental Zones (with Yiqing Xing) China Economic Review Vol. 77, Issue 1 , February 2023
Informal Economy, State Capacity and Local Innovation (with Yiqing Xing) China Economic Quarterly Vol. 24, No. 3, May 2024
Degree-Weighted Social Learning (with Xiao Han, Xin Tong, Yusheng Wu and Yiqing Xing) AEJ Micro Forthcoming
Working Papers
Policy Vagueness and Reputational Concern (with Liuchun Deng and Yufeng Sun)
--We develop a game-theoretic model to examine how a leader's reputational concern influences the vagueness of policy guidance provided to subordinates. The leader, driven by both reputational and policy concerns, can be either congruent--aligning with citizens' policy preferences--or non-congruent. The leader's reputational concern arises from the desire to be perceived as congruent by citizens. Vague guidance obscures the leader's preferences and encourages subordinates to experiment, whereas clear guidance leads to uniform policy implementation. Our analysis reveals that although vagueness dominates when leaders are motivated solely by either policy or reputational concerns, an incentive for clarity can emerge from the trade-off between these two motives. This result suggests a non-monotonic relationship between reputational concern and policy vagueness. We further examine how reputational concern may negatively affect social welfare, analyze the roles of the leader's ex ante congruence and competence, and apply our theory to interpret real-world examples.
--We develop a game-theoretic model to examine how a leader's reputational concern influences the vagueness of policy guidance provided to subordinates. The leader, driven by both reputational and policy concerns, can be either congruent--aligning with citizens' policy preferences--or non-congruent. The leader's reputational concern arises from the desire to be perceived as congruent by citizens. Vague guidance obscures the leader's preferences and encourages subordinates to experiment, whereas clear guidance leads to uniform policy implementation. Our analysis reveals that although vagueness dominates when leaders are motivated solely by either policy or reputational concerns, an incentive for clarity can emerge from the trade-off between these two motives. This result suggests a non-monotonic relationship between reputational concern and policy vagueness. We further examine how reputational concern may negatively affect social welfare, analyze the roles of the leader's ex ante congruence and competence, and apply our theory to interpret real-world examples.
Principal Competence and Organizational Candor: How Moderate Expertise Breeds Cover-Ups (with Yufeng Sun)
--Organizations often rely on the same interim report to answer two different questions: Should the organization continue with the current course of action, and should it retain the manager who generated the report? We study how this joint evaluation shapes communication when the evaluator is imperfectly informed. In our model, a principal chooses an initial policy, an agent privately learns feedback about both policy fit and execution quality, and the agent’s report guides both policy revision and personnel retention. We show that improving principal competence has a non-monotonic effect on organizational performance. At moderate competence, agents engage in cover-ups: they report favorable news to avoid the inference that both the policy and the agent are failing. At high competence, the distortion can reverse: agents may overstate negative news to redirect blame from execution to policy. The result is a competence trap in which better oversight initially reduces performance before eventually improving it. We then study accountability design. Performance-based incentives reduce misreporting, but the intensity required to eliminate distortion depends on evaluator competence, so a uniform incentive scheme is generally not optimal. The analysis implies that organizations should not rely on a single report to govern both project review and personnel evaluation; separating these decisions, or supplementing joint evaluation with audit and disclosure protocols, can improve candor.
--Organizations often rely on the same interim report to answer two different questions: Should the organization continue with the current course of action, and should it retain the manager who generated the report? We study how this joint evaluation shapes communication when the evaluator is imperfectly informed. In our model, a principal chooses an initial policy, an agent privately learns feedback about both policy fit and execution quality, and the agent’s report guides both policy revision and personnel retention. We show that improving principal competence has a non-monotonic effect on organizational performance. At moderate competence, agents engage in cover-ups: they report favorable news to avoid the inference that both the policy and the agent are failing. At high competence, the distortion can reverse: agents may overstate negative news to redirect blame from execution to policy. The result is a competence trap in which better oversight initially reduces performance before eventually improving it. We then study accountability design. Performance-based incentives reduce misreporting, but the intensity required to eliminate distortion depends on evaluator competence, so a uniform incentive scheme is generally not optimal. The analysis implies that organizations should not rely on a single report to govern both project review and personnel evaluation; separating these decisions, or supplementing joint evaluation with audit and disclosure protocols, can improve candor.
Governmental System and Economic Volatility under Democracy (with Christopher Li, He Wang, Zitong Zhang and Weifeng Zhong)
A Theory of Multiplexity: Sustaining Cooperation with Multiple Relationships (with Wei Huang and Yiqing Xing)
Work in progress
Communication with Discretion (with Jin Li and Yiqing Xing)
Algorithm Competition and Social Welfare (with Jiawei Wang, Xin Tong and Matteo Sesia)
Algorithm Competition and Social Welfare (with Jiawei Wang, Xin Tong and Matteo Sesia)