Xueheng Li. Designing Weighted and Directed Networks under Complementarities (2022). Accept subject to Minor Revision in Games and Economic Behavior. Available at SSRN: https://ssrn.com/abstract=3299331.
- Optimizing a network of complementarities leads to an endogenous hierarchy among ex ante identical agents. Formally, all optimal networks under complementarities are “generalized nested split graphs”, in which agents are totally ordered by “link-dominance”.
Xueheng Li. Resentment and the Evolution of Cooperative Norms (2022). Available at SSRN: https://ssrn.com/abstract=3512872.
- If people disapprove and punish behaviors that violate common social practices and are harmful to others, then cooperation can be sustained as a self-fulfilling social norm. This insight leads to long-run dynamics of cooperation and punishment consistent with recent cross-cultural and experimental findings that are difficult to explain by traditional evolutionary models of cooperation.
Work in Progress
Xueheng Li. Stochastic Stability in Psychological Games. This project is funded by the National Natural Science Foundation of China for Young Scholars（国家自然科学基金青年项目）, Grant No. 72203105, 2023-2025.
- Psychological game theory is a general framework to study interactions between individuals with belief-dependent preferences. Psychological games, however, often admit multiple equilibria. This project applies and extends the concepts and techniques of stochastic dynamics and stability to examine the social dynamics of high-order beliefs in psychological games. The aim is to pin down the most robust equilibrium for each generic psychological game.
Yanlin Chen, Xueheng Li, and Tianle Song. The Pareto Principle: A Network Formation Model of Public Goods Provision.
- In the context of public goods provision, the Pareto principle — also called the 80-20 rule — states that most to all public goods are provided by a roungly fixed small but non-negligible proportion (say, 20%) of individuals, the “vital few”. We consider a network formation game in which public goods provision are endogenously determined. Every strict equilibrium network exhibits 1) a nested upward-linking network structure and 2) the Pareto principle.
Valeria Burdea and Xueheng Li. The Market for Lemons and Liars.
- It has been proposed that intrinsic preferences for truth-telling can mitigate adverse selection in the market. We argue that relying on intrinsic preferences for truth-telling alone is unlikely to mitigate adverse selection, because there is self-selection and a market for liars: people with low lying aversion self-select into cheap-talk markets with lax information disclosure rules, leading to inefficiency as if all individuals are material payoff maximizers.