Alastair Langtry

Keeping up with “The Joneses” matters. This paper examines a model of reference dependent choice where reference points are determined by social comparisons. An increase in the strength of social comparisons, even by only a few agents, increases consumption and decreases welfare for everyone. Strikingly, a higher marginal cost of consumption can increase welfare. In a labour market, social comparisons with co-workers create a big fish in a small pond effect, inducing incomplete labour market sorting. Further, it is the skilled workers with the weakest social networks who are induced to give up income to become the big fish. 

This paper adapts ideas from social identity theory to set out a new framework for modelling conspicuous consumption. Agents derive status from their own conspicuous consumption and from belonging to an identity group with high conspicuous consumption. Importantly, these two sources of status are substitutes. Agents also feel pressure to conform with their neighbours in a network. This framework can rationalise a set of seemingly conflicting stylised facts about conspicuous consumption that are currently explained by different families of models. In addition, our model delivers new testable predictions regarding the effect of network structure and income inequality on conspicuous consumption.

Many social and economic behaviors, from technology adoption to protest participation, are complex contagions requiring social reinforcement. In these settings, agents take an action only if a minimum number of their neighbors also do so. While threshold models capture this core mechanism, deriving tractable comparative statics for how behavior responds to network structure has proven elusive, rendering policy recommendations for network design intractable. We introduce a new approach using large random networks. This unlocks powerful comparative statics and allows us to solve for the optimal network design by a principal who influences overall network connectivity but not its exact structure. We find that as connectivity increases, participation jumps discontinuously from zero at a critical cut-off and exhibits diminishing returns thereafter. This reveals a “missing middle” in the principal’s optimal choice: network connectivity is either set at the critical threshold to prevent participation, or pushed substantially above it.

This paper proposes a new lens for studying threshold games played on networks when the thresholds are heterogeneous. These are games where agents have two possible actions, and prefer action 1 if and only if enough of their neighbours choose action 1. We propose a transformation of the network that `absorbs' the heterogeneity in thresholds into the network. This allows us to characterise equilibria in terms of the k-core -- a well-studied measure of network cohesiveness -- of the transformed network. Our model is also the direct analogy to the workhorse model of Ballester et al. (2006) when actions are 0 or 1. Further, our binary action version exhibits a remarkable stability property. When agents have linear-quadratic preferences, the k-core of the transformed network characterises the unique subgame perfect equilibrium of a sequential move version of the game -- no matter what order agents move in.

This paper presents a model of network formation and public goods provision in local communities. Here, networks can sustain public good provision by spreading information about people's behaviour. I find a critical threshold in network connectedness at which public good provision drops sharply, even though agents are highly heterogeneous. Technology change can tear a community's social fabric by pushing high-skilled workers to withdraw from their local community. This can help explain rising resentment toward perceived 'elites' - their withdrawal actively harms those left behind. Moreover, well-meaning policies that upskill workers can make them worse off by reducing network connectedness.

When a government makes many different policy decisions, lobbying can be viewed as a contest between the government and many different special interest groups. The government fights lobbying by interest groups with its own political capital. In this world, we find that a government wants to `sell protection' -- give favourable treatment in exchange for contributions -- to certain interest groups. It does this in order to build its own `war chest' of political capital, which improves its position in fights with other interest groups. And it does so until it wins all remaining contests with certainty. This stands in contrast to existing models that often view lobbying as driven by information or agency problems. 

We show that gambling style behaviour is important in politics: politicians ‘gamble for re-election’ in the context of a political leader selection. We exploit unique access to leaked information on MPs’ individual decisions in the 2021 leadership election of Germany’s centre-right parties. MPs are more likely to vote for a riskier candidate when facing lower re-election chances. These results match the predictions derived from our model of rational risk-taking. Gambling for re-election shows that MPs trade off leaders’ expected quality against their riskiness. It provides a new explanation for intra-party dissent, and rationalises why parties may choose low quality leaders.

This paper presents a new rationale for a self-interested economic elite voluntarily extending property rights. When agents make endogenous investment decisions, there is a commitment problem. Ex-post, the elite face strong incentives to expropriate investments from the non-elite (who don’t have property rights), which dissuades investment. Extending property rights to new groups can resolve this problem, even for those not given property rights, by making public good provision more attractive to the elite. Unlike other models of franchise extensions, extending property rights in this paper does not involve the elite ceding control to others. Rather, it changes the incentives they face. Additionally, adding identity groups to the model shows that an elite faces weaker incentives to resolve the commitment problem when it is part of a minority identity – identity fragmentation makes it harder for a society to extend property rights.

In recent years online social networks have become increasingly prominent in political campaigns and, concurrently, several countries have experienced shock election outcomes. This paper proposes a model that links these two phenomena. In our set-up, the process of learning from others on a network is influenced by confirmation bias, i.e. the tendency to ignore contrary evidence and interpret it as consistent with one's own belief. When agents pay enough attention to themselves, confirmation bias leads to slower learning in any symmetric network, and it increases polarization in society. We identify a subset of agents that become more/less influential with confirmation bias. The socially optimal network structure depends critically on the information available to the social planner. When she cannot observe agents' beliefs, the optimal network is symmetric, vertex-transitive and has no self-loops. We explore the implications of these results for electoral outcomes and media markets. Confirmation bias increases the likelihood of shock elections, and it pushes fringe media to take a more extreme ideology.