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Rohit Lamba Profile

ROHIT LAMBA (PH.D., PRINCETON UNIVERSITY)

Rohit Lamba works in the area of mechanism design. Broadly speaking mechanism design is the reverse engineering of game theory - given a set of individuals or bigger actors such as firms or political parties, and a set of desired objectives, it asks the question, “can we design a series of rules (that is, a mechanism) such that the outcome (or equilibrium) of the interaction of these actors with those rules will result in the desired objectives?” His PhD thesis was on the theoretical aspects of dynamic mechanism design, when the aforementioned interactions are intertemporal in nature. These have direct applications to tax systems, public goods provision and auctions.

His immediate research agenda comprises of two critical applications of the theory of mechanism design. First is on potential mechanisms of monetary policy coordination. The decisions taken by the Fed or the Bank of England have significant impact on emerging markets such as Brazil, China and India. However, the mandate of central banks is domestic. This discrepancy has been further exacerbated by the continuously declining influence of multilateral institutions in the area of international finance. How can one reconcile this contradiction in a highly globalized financial architecture? Second, how should governments all over the world issue their debt? These are done primarily through treasury auctions. Rohit has acquired a large data set of every bid in the Indian treasury auctions from 2005 onwards. This is a rich data set that will allow him to ask very specific questions on the nature and methodology of debt issuance: What auction format should be used? What should be basket of maturities of these bonds? What are right models to analyse these auctions?

Both of these topics require techniques and knowledge from a host of subjects. They are of course grounded in the principles of economic theory. Moreover, they rely on an understanding of politics and political economy for central banking decisions are fundamentally political in nature. Further, he will also be borrowing tools from computer science and statistics of large data. Finally, the psychology of decision making is employed in analysing non-conventional notions of objectives such as max-min and worst case optimization.

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