My thesis studies name market and its application into economic topics. The thesis consists of three chapters:
In the first chapter "Name, Politician Selection and Political Accountability", I provide a framework to model politician's reputation even without re-election, by introducing a name market in the sense of Tadelis (2002). The demography structure is a two-period overlapping generations model, so there will
be the young and the old. In the model, we define the old leader's name as a good name if he/she finished a public project. Through the name market, a good name
is traded with positive price from the old politician to the young politician, to discipline the old politician and screen the young politician. On such a separating equilibrium, there will be a name demand side an...[
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My thesis studies name market and its application into economic topics. The thesis consists of three chapters:
In the first chapter "Name, Politician Selection and Political Accountability", I provide a framework to model politician's reputation even without re-election, by introducing a name market in the sense of Tadelis (2002). The demography structure is a two-period overlapping generations model, so there will
be the young and the old. In the model, we define the old leader's name as a good name if he/she finished a public project. Through the name market, a good name
is traded with positive price from the old politician to the young politician, to discipline the old politician and screen the young politician. On such a separating equilibrium, there will be a name demand side and name supply side. The name demand side is the key. Since young politicians hold private information about their ability, and such ability affects the chance to finish the public project for the voter, politicians' bid for a good name also differs by their ability. A politician with the high ability is more capable of sustaining a good name, so he/she will post a higher bid. The fact that most capable politician will bid highest and win the good name constructs the name demand side. Because of this, voter or citizen could rely on the observable good name to infer the type of politician. Anticipating this, old politician in the office is willing to exert efforts in the public project to sustain a good name to sell to his following cohort; that is the name supply side. Therefore, an inter-generation name market between young and old politician emerges to mitigate both selection and moral hazard problem. My model provides a rationale for partisan politics that name trading can be perceived as within party payment transfer and a party's name can persist for several periods while its ownership
changes. Another crucial insight from the above model is that " it is because the selection problem, that moral hazard can be alleviated." To push this logic further, we show transparency on the young politicians' type crowds out name demand, finally reduces citizen's welfare. The intuition is, since "it is because the selection problem, that moral hazard can be alleviated", when the transparency reduces
selection problem it inevitably aggravates the moral hazard problem.
In the second chapter "Network, Coordination and Contagion", I introduce a network formation game before a simple coordination game. I show that agents form a star network to aggregate and transmit information. The
intuition goes as follows: Agents receive signals of the coordination payoff based on aggregate state. A good state suggests a profitable payoff, and generates more good signal across agents, while a bad state suggests a low payoff and generates more bad signal across agents. Network linking is costly, in the sense that each network link to other agents requires a cost. Within some ranges of parameters, agents with bad signal refuse to pay a cost to link a center because their inference about receiving good information of payoff is low; while agents with the good signal
are willing to pay the linking cost because they are optimistic to receive good information of payoff. Because of such separating strategy, the size of network differs across different aggregate states since signal is distributed according to the aggregate state. For example, when state is good, two thirds of agents will receive a good signal and connect to a center; while it is bad, only a third will connect.
So the center of the star network, could infer the aggregate state from the size of the network. Or rather, network itself is a signal and its size varies across different state. After inferring the aggregate state, the center sends information to all the nodes of network if the state is good; no information if it is bad. So we explain the information network functions and its structure. I call the center of star network as (information) leader afterwards, and further introduce name market to screen and incentivize leader. Agents differ in their cost of sending information throughout network: for example, someone is more awkward in public
speech (high sending cost), so there is a leadership selection problem. We call a leader's name a good name if a coordination succeeds with high payoff under
the leadership. And such a good name, or any other name can be placed on a name market before the network formation game of the next cohort. Through the name market, the young agent with lowest sending cost (highest efficiency) will obtain a good name and shall be linked as the center of the star network, so
name trading provides a focal point of star network formation. I identify a new channel causing coordination contagion: leadership quality. In the model, higher leadership leads to a higher chance of coordination success, and success generates
a good name, and the good name further screens higher leadership. Leadership quality and coordination success reinforce each other through the name market,
leading to contagion. Finally, I derive the optimal linking cost which is the highest cost that agents with good signal is still willing to connect. The intuition goes as follows: part of the name price is linking cost, because becoming the center could save the linking cost, since center shall be connected. As the linking cost is incorporated into the name price and higher name price encourages the random leader to send information, the optimal linking cost shall be as high as possible to provide incentive to the random leader, till the point that even agents with the good signal are unwilling to connect.
In the third chapter "Name as Social Capital", I provide a new concept of social capital. In the model, players are matched to play prison dilemma, and
they will have a good name if the match ends with successful production. By introducing an inter-generation name market, I show how name facilitates coordination and accumulate over time. Hence, name as social capital. Moreover, the simplicity of our framework allows us to study the interaction between name and law, or any other culture defined cooperation, like nepotism. I show nepotism free rides
on name system by enjoying the Pareto improving outcome without contributing
name demand. Nepotism crowds out name system. With some size heterogeneity
of cooperation, I show there should be an optimal division of governance between
social capital and government intervention.
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