Causal Strategic Inference in a Game—Theoretic Model of Multiplayer Networked Microfinance Markets

Performing interventions is a major challenge in economic policy-making. We present causal strategic inference as a framework for conducting interventions and apply it to large, networked microfinance economies. The basic solution platform consists of modeling a microfinance market as a networked ec...

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Bibliographic Details
Published in:ACM transactions on economics and computation 2018-10, Vol.6 (2), p.1-58
Format: Article
Language:English
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Summary:Performing interventions is a major challenge in economic policy-making. We present causal strategic inference as a framework for conducting interventions and apply it to large, networked microfinance economies. The basic solution platform consists of modeling a microfinance market as a networked economy, learning the model using single-sample real-world microfinance data, and designing algorithms for various causal questions. For a special case of our model, we show that an equilibrium point always exists and that the equilibrium interest rates are unique. For the general case, we give a constructive proof of the existence of an equilibrium point. Our empirical study is based on microfinance data from Bangladesh and Bolivia, which we use to first learn our models. We show that causal strategic inference can assist policy-makers by evaluating the outcomes of various types of interventions, such as removing a loss-making bank from the market, imposing an interest-rate cap, and subsidizing banks.
ISSN:2167-8375
2167-8383
DOI:10.1145/3232861