arXiv subjects

Zafer Kanik

Publications and source records attributed to Zafer Kanik.

3 recordsLinked to original sources

arXiv2026

The Economic Benefits and Costs of AI and Policies to Mitigate AI's Impact on Inequality

We examine the economic impact of increasingly productive AI and policies that spread its benefits across the economy. Improvements in AI productivity trigger labor reallocation and changes in absolute and relative wages for different types of labor. Wages of labor that is essential for building AI increase faster than overall GDP. Wages of labor that is substituted for by AI decrease in both absolute and relative terms. Wages of labor that is used only in final goods production and is not displaced by AI increase in line with overall GDP. We contrast the impact of productivity gains depending on whether AI production is competitive or monopolistic. Monopoly production of AI restricts its deployment, slowing the transition and impact of AI. Optimal tax and regulatory policies that achieve Pareto-improvements differ depending on whether there is competition in AI production.

econ.GN↗

arXiv2026

Strategic Expression, Popularity Traps, and Welfare in Social Media

Social media platforms systematically reward popularity over authenticity, incentivizing users to strategically tailor their expression for attention. In this paper, we introduce (i) popularity as a strategic expression mechanism, distinct from the canonical mechanisms of conformity, learning, persuasion, and (mis)information transmission in social networks, and (ii) a utilitarian framework for measuring user welfare that maps directly to observable platform metrics, filling a critical gap in the social media literature. In the model, agents hold fixed heterogeneous authentic opinions and derive utility gains from the popularity of their own posts -- measured by likes received, and utility gains (losses) from exposure to content that aligns with (diverges from) their authentic opinion. Social media interaction acts as a state-dependent welfare amplifier: light topics generate Pareto improvements, whereas intense topics make everyone worse off in a polarized society (e.g., political debates during elections). Moreover, strategic expression amplifies social media polarization during polarized events while dampening it during unified events (e.g., national celebrations). Consequently, strategic distortions magnify welfare outcomes, expanding aggregate gains in light topics while exacerbating losses in intense, polarized ones. Counterintuitively, strategic agents often face a popularity trap: posting a more popular opinion is individually optimal, yet collective action by similar agents eliminates their authentic opinion from the platform, leaving them worse off than under the authentic-expression benchmark. Homophilic algorithms that match users with preferred content -- widely used by platforms -- discipline popularity-driven behavior, narrowing the popularity trap region and limiting its welfare effects.

econ.GN↗

arXiv2025

The R&D Productivity Puzzle: Innovation Networks with Heterogeneous Firms

We introduce heterogeneous R&D productivities into an endogenous R&D network formation model, generalizing the framework of Goyal and Moraga-Gonz\'alez (2001). Heterogeneous productivities endogenously create asymmetric gains from collaboration: less productive firms benefit disproportionately from links, while more productive firms exert greater R&D effort and incur higher costs. When productivity gaps are sufficiently large, more productive firms experience lower profits from collaborating with less productive partners. As a result, the complete network -- stable under homogeneity -- becomes unstable, and the positive assortative (PA) network, in which firms cluster by R&D productivity, emerges as pairwise stable. Using simulations, we show that the clustered structure delivers higher welfare than the complete network; nevertheless, welfare under this formation follows an inverted U-shape as the fraction of high-productivity firms increases, reflecting crowding-out effects at high fractions. Altogether, we uncover an R&D productivity puzzle: economies with higher average R&D productivity may exhibit lower welfare through (i) the formation of alternative stable networks, or (ii) a crowding-out effect of high-productivity firms. Our findings show that productivity gaps shape the organization of innovation by altering equilibrium R&D alliances and effort. Productivity-enhancing policies must therefore account for these endogenous responses, as they may reverse intended welfare gains.

econ.GN↗