Thesis
Title: Essays in Economics of Network
Degree: Ph.D. in Development Studies
Institution: Indira Gandhi Institute of Development Research (IGIDR), Mumbai
Supervisor: Prof. Shubhro Sarkar
My doctoral research consists of four self-contained essays in network economics. Broadly, the thesis examines how strategic interactions are shaped by network structures, contest design, public goods provision, and social learning.
Chapter 1
Contests on Bipartite Networks: Efficient Contest and Equilibrium Effort
Abstract
This chapter extends the model of Matros and Rietzke (2024) by introducing participation costs for each contest entered. Participants exert a common effort level across all contests they choose to enter while incurring a separate participation cost for every contest. In contrast to the benchmark result of Matros and Rietzke (2024), we demonstrate that the complete bipartite network no longer maximizes aggregate effort under this modified cost structure. The analysis highlights how participation costs fundamentally alter optimal contest design and equilibrium outcomes.
Chapter 2
Contests on Bipartite Networks: Equilibrium Contest and Equilibrium Effort
Abstract
A central objective in economics is to align individual incentives with socially efficient outcomes. Building on the results of Chapter 1, this chapter investigates whether the network that maximizes aggregate effort also constitutes a Nash equilibrium with respect to contest participation.
We show that these objectives generally diverge. Although one network structure maximizes total effort, individual players retain incentives to deviate in pursuit of higher private payoffs. Through numerical analysis of a three-player, two-contest environment with asymmetric prize values, we evaluate aggregate effort across all feasible bipartite networks. The results reveal that a contest designer can maximize effort by assigning one participant exclusively to the highest-value contest while allowing the remaining players to compete across multiple contests. This specialization induces substantially greater effort from the specialist, outweighing the reduction in effort by the remaining participants. The findings emphasize the importance of participation costs in contest design and illustrate the tension between social efficiency and strategic stability.
Chapter 3
Competitive Altruism in Public Goods Provision
Abstract
This chapter develops a model in which individuals simultaneously choose effort levels to contribute to a public good and decide which links to form in order to benefit from the contributions of others. The model incorporates competitive altruism, whereby players receive reputational benefits from contributing more than their neighbors.
For small networks, we characterize equilibrium outcomes and show that multiple network structures—including star, circle, and complete graphs—can emerge as equilibria. Total social welfare differs across these structures and depends critically on the cost of link formation. The analysis demonstrates that the socially optimal network is not always strategically stable, revealing a persistent gap between equilibrium behavior and collective welfare. These findings suggest an important role for coordination mechanisms in promoting efficient network formation.
Chapter 4
Clustering and Polarization in Social Networks
Abstract
This chapter studies the role of homophily in network formation and the evolution of political opinions among heterogeneous agents. Individuals form pairwise-stable networks by preferentially connecting with others holding similar views, while opinions evolve according to a modified DeGroot updating process.
Numerical simulations show that homophily naturally generates clusters of like-minded agents, leading to persistent opinion polarization and preventing convergence to a global consensus. The results demonstrate how initial beliefs and endogenous network formation jointly determine long-run political outcomes, providing insight into the mechanisms underlying ideological segregation and sustained polarization.
Current Status
- Chapter 1: Ongoing research
- Chapter 2: Ongoing research
- Chapter 3: Work in Porgress
- Chapter 4: Ongoing research