Topics in Group Formation, Inequality and Conflict

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This research project studies various aspects of group and coalition formation; the implications of such processes for economic efficiency, social polarization, and inter group conflict. The research project has three main components. First, several facets of group and network formation will be studied. At a theoretical level, the objective is to analyze group formation in the presence of farsighted economic agents. These topics have already been a major focus of past research by the principal investigator, but the new focus here is on network formation, a versatile concept that encompasses many standard theories of coalition formation. In addition, group and network structure will be investigated in leading special cases, such as those pertaining to insurance, information, or technology diffusion. Second --- and complementary to the first part --- the notion of ``social polarization" across economic, religious, or ethic groupings will be introduced and studied. It will be argued, both theoretically and empirically, that social polarization is closely connected with the incidence of social conflict. This claim will be evaluated by an empirical study of polarization and its correlates, as well as through behavioral models of social conflict in which the polarization of characteristics plays an explicit role. Finally, the project will apply some of these ideas to the escalating communitarian violence in India over the past two decades. The economic and demographic characteristics of different religious and caste groups in India will be studied, and such characteristics connected with the outbreak of religious or ethnic violence at the district level. In addition, several data sources will be combined to create a unique dataset for studying conflict and distribution in the Indian context.Group formation is central to questions in economic theory, political economy, and sociology. This project describes --- among other things --- a methodology for thinking about coalition formation. This approach is likely to have implications for game-theoretic models, industrial organization, and political economy. From a more applied viewpoint, polarization is a topic of central interest, both to theorists working on inequality, as well as to practitioners seeking correlates of outcomes such as low growth, violent crime, and civil wars. Finally, the study of Hindu-Muslim and caste conflict is possibly the first that links economic and demographic variables to ethnic or religious conflict. This sort of analysis has implications not just for ethnic conflict within India but for conflicts in other parts of the world.