Delegating War

Abstract : Governments often delegate the fight for control over natural or political resources to local armed groups. This paper presents a model of proxy war in which governments delegate conflict by sending non-negotiable offers to militias. Contracts are composed of monetary transfers and of a sharing rule of political influence. Armed groups are positioned along a continuum representing the ideological misalignment between each militia and its government sponsor. Using a principal-agent model with two principals and two agents, I characterize the optimal contracts under complete and incomplete information about the militias' ideological positions. The analysis shows that with incomplete information armed groups receive lower transfers but are left with higher political independence. When governments strategically choose whether to fight by delegation or engage directly in conflict, the equilibria can be characterized in function of the local support to militias. If governments compete to recruit the same armed group, the militia generally carves out higher rents and pledges allegiance to the government ideologically closer.

---

Interacting Collective Action Problems

Abstract : We consider a setting where groups of agents interact, any group member’s action inducing an externality in the same group, and aggregate action in one group induces an externality in other groups. The interplay between in-group and out-group interactions is shown to affect the comparison between the decentralized and the cooperative outcomes, and also the effect of the fundamentals on individual decisions and welfare, compared to the case where there is no in-group or out-group interaction. Moreover, group characteristics greatly influence the capacity of group-level cooperation to alleviate the inefficiency problems driven by decentralization. Finally, we identify cases where inter-group relocation policies result in efficiency gains, and highlight how this crucially depends on the existence and nature of in-group and out-group interactions. All results stress the importance to acknowledge interactions between potential collective action problems.

---

Learning is Caring: Soil Heterogeneity, Social Learning and the Formation of Close-knit Communities

Abstract : This paper studies the impact of social learning on the formation of close-knit communities. It provides empirical support to the hypothesis, put forth by the historian Fred Shannon in 1945, that local soil heterogeneity limited the ability of American farmers to learn from the experience of their neighbors, and that this contributed to their ``traditional individualism.'' Consistent with this hypothesis, I establish that historically, U.S. counties with a higher degree of soil heterogeneity displayed weaker communal ties. They were also characterized by higher agricultural diversity and a lower rate of adoption of fertilizers, which is consistent with soil heterogeneity limiting the scope of farmers' social learning. I provide causal evidence on the formation of this pattern in a Difference-in-Differences framework, documenting a reduction in the strength of farmers' communal ties following migration to a soil-heterogeneous county, relative to farmers that moved to a soil-homogeneous county. Using the same design, I also show that soil heterogeneity did not affect the social ties of non-farmers. The impact of soil heterogeneity is long-lasting, still affecting culture today. These findings suggest that, while understudied, social learning is an important determinant of culture.

---