Browsing by Author "Fang, Songying"

Now showing 1 - 11 of 11
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    Belief in territorial indivisibility and public preferences for dispute resolution
    (Cambridge University Press, 2022) Fang, Songying; Li, Xiaojun; Tago, Atsushi; Chiba, Daina
    This study investigates how individuals may develop more or less strong beliefs in the indivisibility of a disputed territory and how such beliefs may influence their policy preferences toward resolving the dispute. Using a survey experiment in Japan, we find that historical ownership strengthens respondents’ beliefs in territorial indivisibility. Furthermore, those who hold the strongest belief in territorial indivisibility are much less likely to support bilateral negotiation and more likely to support contentious policies, including but not limited to military actions. Finally, we explore external validity of the findings by analyzing respondents who had a real dispute in mind during the survey with China, South Korea, and Russia, respectively.
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    Electricity grids and geopolitics: A game-theoretic analysis of the synchronization of the Baltic States’ electricity networks with Continental Europe
    (Elsevier, 2024) Fang, Songying; Jaffe, Amy Myers; Loch-Temzelides, Ted; Lo Prete, Chiara; Baker Institute for Public Policy
    Can supply of electricity be used as an energy weapon? This question rises in importance as more countries trade electricity across borders to smooth out grid stability issues and improve cost-efficient dispatching across large geographic areas. In the context of the Baltics’ disentanglement from the BRELL (Belarus, Russia, Estonia, Latvia, and Lithuania) electricity grid and synchronization with Europe, we develop a game-theoretic model and examine the strategies of the involved parties in light of the potential for electricity trade to be used as a geopolitical weapon. We conceptualize the process of the synchronization project as a sequential-move game between three actors (Russia, the Baltic states, and the EU-U.S.). Our findings suggest that, in large part due to reputational concerns, Russia is unlikely to cooperate in the synchronization process. Instead, our model predicts that Russia will not wait for the Baltic states to complete their synchronization with the European grid before disconnecting them from the BRELL system. Direct Russian cyberattacks against Baltic grids are not implemented and the Baltics do not have to make concessions, provided that Western allies signal a strong likelihood of deterrent retaliation. We offer policy recommendations for Europe, Russia and the Baltic states.
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    Essays on Durations of War and Postwar Peace
    (2012-09-05) Chiba, Daina; Leeds, Brett Ashley; Reed, William L.; Fang, Songying; Morgan, T. Clifton; Boylan, Richard T.
    This dissertation consists of three self-contained essays that investigate the duration of war and the duration of postwar peace. The first essay studies both durations jointly, with a particular focus on the interdependence between the two processes. It demonstrates that membership in security organizations can prolong the durability of peace after conflict, but that the expected longer peace after conflict can also prolong the duration of conflict. The second essay analyzes the duration of war in a greater detail, exploring how third-party actors influence the process. It shows that balanced intervention can shorten the duration until a negotiated settlement is reached between the disputants. The third essay looks at the stability of postwar peace by focusing on the strength of cease-fire agreements. It argues that stronger agreements can maintain longer peace after wars by helping the disputants resolve the bargaining problems. The statistical analysis that corrects for the endogeneity of agreement strength provides support for the argument.
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    Essays on Game Theory and Financial-Strategy Test
    (2015-05-22) Zhu, Minyan; Dudey, Marc P; Brown, Bryan W; Fang, Songying
    Game theory studies strategic decision making among multiple rational players. Since 1950 Nash’s famous paper, it has wide applications to many fields: political science, financial market, cooperate finance, industrial organization and etc. Researchers are not only interested in the applications of game theory but also focus on the mechanism design that considers the structure of game forms. In this dissertation, I explore both areas: the first two chapters consider the games played by multiple players in industrial organization and the third chapter considers the mechanism design problem for the assignment problem. Continued government support of public good programs (e.g. assistance to less developed countries, or to university researchers for work on a multistage project, or to communities for environmental improvement programs) often depends on grant recipients making adequate progress toward their goals. Chapter 1 studies a prisoner’s dilemma with positive payoffs that will repeat a given known number of times or until there is evidence of cheating, whichever comes first. Our discussion focuses precisely on how much cooperation is possible (i.e., for how many periods cooperation lasts). When the termination rule is based on perfect information about the players’ behavior and players are motivated to cooperate for at least one period, early termination of the game never occurs, i.e. cooperation continues until the last possible period. Cooperation may end sooner when the termination rule is based on imperfect information about the players’ behavior. For the case of imperfect information, I show how much cooperation can occur as a function of the model parameters and under the assumption that players are able to engage in mutual monitoring. Chapter 2 investigates the motivation of mutual recommendations. It seems irrational for people to refer customers to the other stores without having any profit. But such examples are around us, for example, a mechanical shop may refer customers to another one when it cannot fix the issues. In this chapter, I consider a two-player infinitely repeated game. Players, in each period, can either choose recommendation or not-recommendation that depends on the history of a public signal. A new mechanism, k + 1 punishment scheme, is proposed in which two players stop recommending when k consecutive bag signals occur. Among all possible k + 1 punishment schemes, there exists a unique optimal k* to maximize the player’s payoff. Thus, mutual recommendations between players can increase their overall profits even if such action incurs cost. Chapter 3 investigates a typical class of assignment problems, which relaxes the assumption of the completeness of bipartite graphs but enforces balance conditions. When the domain is 2-connectivity (each agent has at most 2 available tasks), I find there exist mechanisms satisfying ordinal-efficiency, equal treatment of equals, and strategy-proof. This result does not restrict the number of players in the game. Since a strong negative result exists in the standard assignment problem, I propose a new mechanism, hybrid mechanism, to find a more relaxed domain to simultaneously satisfy all previous three conditions. The last chapter of my dissertation explores the portfolio management. It compares the results of the decay model with various DCC-GARCH models in risk parity strategy. 16 commodity futures data ranging from 1990.1.1 to 2013.12.31 are implemented to construct portfolio weights. The performance measures are risk attribution, Sharpe Ratio, total return, loss functions and rolling volatilities. I find the decay model and DCC-GARCH model have the similar performances under risk-parity strategy, even if they have different assumptions about the covariance matrix.
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    International Organizations as Policy Advisors
    (The IO Foundation, 2012) Fang, Songying; Stone, Randall W.
    How can international organizations persuade governments to adopt policy recommendations that are based on private information when their interests conflict? We develop a game-theoretic model of persuasion that applies regardless of regime type and does not rely on the existence of domestic constituency constraints+ In the model, an international organization ~IO! and a domestic expert have private information about a crisis, but their preferences diverge from those of the government, which must choose whether to delegate decision making to the expert+ Persuasion can take place if the international institution is able to send a credible signal+ We find that this can take place only if the preferences of the IO and the domestic expert diverge and the institution holds the more moderate policy position+ This result contrasts with conventional wisdom, which holds that the necessary condition for IOs to exert influence is support from a domestic constituency with aligned preferences. Our model suggests that, far from being an obstacle to international cooperation, polarized domestic politics may be a necessary condition for IOs to exert effective influence.
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    New Alignments? The Geopolitics of Gas and Oil Cartels and the Changing Middle East
    (2012) Fang, Songying; Jaffe, Amy Myers; Loch-Temzelides, Ted P.; James A. Baker III Institute for Public Policy
    We analyze the likelihood of different coalitions emerging in energy markets in light of two new transformational events: the Arab Awakening and the rise of shale gas in the United States. Our analysis considers both economic and political payouts resulting from alternative energy policies of three major petro-powers: Saudi Arabia, Russia, and Qatar. We discuss the likelihood of price wars in energy markets and identify two conditions under which price wars can occur. There can be a price war in the gas market if Russia is determined to protect its market share in Europe by knocking out other higher cost producers. We find that competitive pressures created by shale gas could make this option more appealing to Russia. Second, Saudi Arabia can generate an oil price war as a foreign policy tool in order to weaken Iran’s position as a rival to the Kingdom. Finally, we consider the recent democratization movement in the Middle East. Significant changes in geopolitical payouts may bring about new coalitions involving Russia. Nevertheless, we find that a gas cartel is unlikely to form in the perceivable future.
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    Strategic Choices in Foreign Aid
    (2013-09-16) Heinrich, Tobias; Morgan, T. Clifton; Stevenson, Randolph T.; Fang, Songying; Vannucci, Marina
    This dissertation addresses three important questions surrounding the politics of foreign aid, namely what leads to its provisions by donor countries, and what are some of its consequences on those receiving it. Using arguments rooted in political economy models and large-N statistics, this dissertation provides three core findings: (i) Foreign aid can be driven by heterogenous motives in the donor country. (ii) This heterogeneity determines whether a donor lives up to the promises over foreign aid that it makes. (iii) Inflows of foreign aid tend to restrain the government’s propensity to engage in killings.
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    The Cost of Security: Foreign Policy Concessions and Military Alliances
    (2012-09-05) Johnson, Jesse; Leeds, Brett Ashley; Fang, Songying; Sizova, Natalia M.
    One way states can mitigate external threats is by entering into military alliances. However, threatened states are reluctant to enter into military alliances because alliance membership can require significant policy concessions. An important and unanswered question is: when will states be willing to make policy concessions in exchange for military alliances? This is the question that is investigated in this project. To address this question I develop a simple three actor bargaining model of alliance formation that endogenizes both external threat and policy concessions. I test the model's implications with two sets of large N analyses and find strong support for the hypotheses. The first set of empirical analyses uses a novel research design that takes into account the attributes of challengers to evaluate states' alliance formation decisions. The second set is based on the same research design and provides one of the first analyses of foreign policy concessions among alliance members. The results suggest that threatened states are willing to make more concessions in exchange for an alliance when they are unlikely to defeat their challengers alone and when their allies have a large effect on their probability of defeating their challengers. This research highlights both the security and non-security motivations for alliance formation and demonstrates that alliances have important influences beyond international security.
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    The Effects of Foreign Audiences in International Dispute Settlements
    (2015-12-02) Matsumura, Naoko; Leeds, Brett Ashley; Morgan , T. Clifton; Fang, Songying; Boylan, Richard
    This dissertation addresses the question of why actors (i.e., states and non-state actors) use international organizations (IOs) to settle disputes when such institutions often do not have enforcement power of their own. I approach this question by looking at the influence of IO dispute settlement processes on the behavior of domestic and foreign audiences. In particular, I argue that actors use IOs in order to influence pro-compliance foreign audiences by providing two types of information: information about violations that have occurred and information about the willingness and ability of parties to comply with settlement obligations. Informed pro-compliance audiences can work as enforcers, which help facilitate a state’s compliance with an IO’s ruling. This dissertation is composed of three stand-alone essays. These essays empirically test the implications of my theoretical arguments on datasets of actors’ use of dispute settlement mechanisms in the areas of trade and foreign investment. This dissertation sheds new light on actors’ strategic use of IOs.
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    Three Essays on Sovereign Default and Robust Policy Design
    (2014-04-23) Li, Xin; Loch-Temzelides, Ted; Narajabad, Borghan N.; El-Gamal, Mahmoud A.; Fang, Songying
    Chapter 1 discusses the optimal fiscal response of a small open economy to business cycle fluctuations at the presence of sovereign default risks. The most recent sovereign debt crisis in Europe has demonstrated that the risk of sovereign default is not a problem in developing economies only. However, empirical studies show that fiscal policy tends to be countercyclical or acyclical in developed small open economies and procyclical in developing countries. This chapter presents a general equilibrium model with endogenous government spending, external debt financing, and sovereign default decisions for a small open economy. The model shows that developed countries’ acyclical fiscal response to productivity fluctuations can be motivated by their larger size of public sectors, lower demand elasticity of public goods, and lower volatilities of domestic investments relative to foreign investments, compared to their developing counterparts. Along this line, the recently observed fiscal policy graduation in some Latin American countries can be rationalized by the shifts in the characteristics of their public sectors towards developed countries. The model also implies that fiscal austerity is always optimal for countries with sufficiently high debt-to-output ratio, and the optimal consolidation consists of tax hikes, cuts in public consumption but not in public investment. Based on Chapman, Fang, Li and Stone (2013), Chapter 2 studies the effect of new official bailouts on capital markets when borrowing countries economic state is private information. We first analyze a game-theoretical model of crisis lending that incorporates bargaining, compliance and enforcement. The presence of asymmet- ric information yields two interesting scenarios. There are conditions under which lending reduces the risk of a deepening crisis and reduces the risk premium demanded by market actors. On the other hand, the political interests that make lenders willing to lend weaken the credibility of commitments to reform, and the act of accepting an agreement reveals unfavorable information about the state of the borrower’s economy. The net “catalytic” effect on the price of private borrowing depends on whether these effects dominate the beneficial effects of the liquidity the loan provides. Decomposing the contradictory effects of crisis lending provides an explanation for the discrepant empirical findings about market reactions, especially with regard to IMF programs. We test the implications of our theory by examining how sovereign bond yields are affected by IMF program announcements, loan size, the scope of conditions attached to loans, and measures of the geopolitical interests of the United States, a key IMF principal. Based on Li, Narajabad, and Temzelides (2013), Chapter 3 turns to the study of robust policy design when decision makers are concerned about model uncertainty. We study a dynamic stochastic general equilibrium model where agents are concerned about model uncertainty regarding climate change. An externality from greenhouse gas emissions adversely affects the economy’s capital stock. We assume that the mapping from climate change to damages is subject to uncertainty, and we adapt and use techniques from robust control theory in order to study efficiency and optimal policy. We obtain a sharp analytical solution for the implied environmental externality, and we characterize dynamic optimal taxation. A small increase in the concern about model uncertainty can cause a significant drop in optimal energy extraction. The optimal tax which restores the social optimal allocation is Pigouvian. Under more general assumptions, we develop a recursive method and solve the model computationally. We find that the introduction of uncertainty matters qualitatively and quantitatively. We study optimal output growth in the presence and in the absence of concerns about uncertainty and find that these can lead to substantially different conclusions.
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    Unpacking “the West”: Divergence and Asymmetry in Chinese Public Attitudes Towards Europe and the United States
    (Sage, 2023) Liu, Adam Y.; Li, Xiaojun; Fang, Songying
    Recent public opinion polls conducted in Europe and the United States show increasingly negative views of China. Does the Chinese public hold similar views of ?the West?? Conducting a two-wave survey in China, we found great divergence and asymmetries in Chinese public perceptions. First, Chinese views of European countries and the US diverge sharply, despite these countries being typically grouped together as ?the West? in mainstream English and Chinese discourses; the Chinese viewed the US much more negatively than Europe. Second, whereas the Chinese reciprocated American antipathy, there was an asymmetry in public perceptions between China and Europe, with the Chinese expressing much greater favourability towards European countries than the other way around, though the degree of favourability still varied by country. Analyses of respondent attributes also yielded insights that both confirm and challenge some of the conventional wisdom regarding age, education, and party membership in Chinese public opinion.