Sandeep Baliga
Sandeep Baliga

Professor of Managerial Economics & Decision Sciences

Print Overview

Professor Baliga joined the faculty at the Kellogg School of Management in 1997. Prior to joining Kellogg, he was a Research Fellow at King's College, Cambridge University. Professor Baliga's research interests include mechanism design, international relations, the theory of the firm and game theory.

Most recently, he has been studying how conflict can arise because decision-makers fear each other's motives not because of greed. Baliga showed that communication is surprisingly useful in reducing fear and increasing cooperation. He has examined the impact of fear of conflict on domestic politics and the incentive to go to war. Another project shows how bluffing about weapons stockpiles can actually help to reduce arms proliferation. Baliga has also studied the strategy of extremists and if and when they can deliberately inflame conflict. 

His earlier work in the theory of the firm studies how authority should be delegated within organizations. He shows that the agent whose effort most improves the productivity of other workers should be responsible for contracting with them, even if he cannot directly monitor others. He also studied the pathological effects of peer review on project investment and identified the repercussions of the "not invested here" effect. 

Baliga was the Managing Editor of the Berkeley Electronic Press Journals in Theoretical Economics and Associate Editor of the European Economic Review. He has published in top journals including the American Economic Review, Journal of Economic Theory, Journal of Political Economy, RAND Journal of Economics, Review of Economic Studies and the Review of Financial Studies.

He blogs at Cheap Talk and is the co-creater of Purple Pricing, an innovative auction method that is being used by Northwestern University to sell football and basketball tickets. He has started a consulting company with two partners to commercialize these ideas. 

Areas of Expertise
Contract Theory
Game Theory
International Economics
Mechanism Design

Print Vita
PhD, 1993, Economics, Harvard University
BA, 1988, Cambridge University, Double First Class Honors

Academic Positions
Professor, Kellogg School of Management, Northwestern University-present
Member, Institute for Advanced Study, Princeton University, 2000-2001
Berry-Ramsey Junior Research Fellow, King's College, Cambridge University, 1993-1997

Grants and Awards
Excellence in Refereeing, American Economic Review, 2014
Google Research Award, Google, 2014-2016
Excellence in Refereeing, The American Economic Review, 2013

Editorial Positions
Editor, Berkeley Electronic Press Journals in Theoretical Economics, 2011-2013
Associate Editor, European Economic Review, 2003-2009

Print Research
Research Interests

Game-theoretic approach to international relations; game theory; mechanism design; contract theory; theory of the firm; 

Baliga, Sandeep, Eran Hanany and Peter Klibanoff. 2013. Polarization and Ambiguity. American Economic Review. 103(7): 3071-83.
Baliga, Sandeep and Tomas Sjostrom. 2013. Bargaining and War: A Review of Some Formal Models. Korean Economic Review. 29(2): 233-266.
Baliga, Sandeep and Tomas Sjostrom. 2012. The Strategy of Manipulating Conflict. American Economic Review. 106(2)
Baliga, Sandeep and Jeffrey Ely. 2011. Mnemonomics: The Sunk Cost Fallacy as a Memory Kludge. American Economic Journal: Microeconomics. 3: 35-67.
Baliga, Sandeep, David Lucca and Tomas Sjostrom. 2011. Domestic Political Survival and International Conflict: Is Democracy Good for Peace?. Review of Economic Studies. 78(2): 458-486.
Axelson, Ulf and Sandeep Baliga. 2009. Liquidity and Manipulation of Executive Compensation Schemes. Review of Financial Studies. 22(10): 3907-3939.
Baliga, Sandeep and Tomas Sjostrom. 2009. Contracting with Third Parties. American Economic Journal: Microeconomics. 1(1): 75-100.
Baliga, Sandeep and Tomas Sjostrom. 2008. Strategic Ambiguity and Arms Proliferation. Journal of Political Economy. 116(6): 1023-1058.
Al-Najjar, NabilSandeep Baliga and David Besanko. 2008. Market Forces and Behavioral Biases: Cost-Misallocation and Irrational Pricing. RAND Journal of Economics. 39(1): 214-237.
Baliga, Sandeep and Tomas Sjostrom. 2004. Arms Races and Negotiations. Review of Economic Studies. 71(2): 351-369.
Baliga, Sandeep and Ben Polak. 2004. The Emergence and Persistence of German and Anglo-Saxon Financial Systems. Review of Financial Studies. 17(1): 129-163.
Baliga, Sandeep and Rakesh Vohra. 2003. Market Research and Market Design. B.E. Journal of Theoretical Economics. 3(1)
Baliga, Sandeep and Stephen Morris. 2001. Coordination, Spillovers and Cheap-Talk. Journal of Economic Theory. 105(2): 450-468.
Baliga, Sandeep. 2002. The Not-So-Secret Agent: Professional Monitors, Hierarchies and Implementation. Review of Economic Design. 7(1): 17-26.
Baliga, Sandeep and Tomas Sjostrom. 2001. Optimal Design of Peer Review and Self-Assessment Schemes (former title "Not Invented Here"). RAND Journal of Economics. 32(1): 27-51.
Baliga, Sandeep and Roberto Serrano. 2001. Multilateral Negotiations with Private Side-Deals: A Multiplicity Example. Economics Bulletin. 3(1): 1-7.
Baliga, Sandeep and Robert Evans. 2000. Renegotiation in Repeated Games with Side-Payments. Games and Economic Behavior. 33(2): 159-176.
Baliga, Sandeep and Sandro Brusco. 2000. Collusion, Renegotiation and Implementation. Social Choice and Welfare. 17(1): 69-83.
Baliga, Sandeep. 1999. Monitoring and Collusion with "Soft" Information. Journal of Law, Economics, & Organization. 15(2): 434-440.
Baliga, Sandeep. 1999. Implementation in Economic Environments with Incomplete Information: The Use of Multi-Stage Games. Games and Economic Behavior. 27(2): 173-183.
Baliga, Sandeep and Tomas Sjostrom. 1999. Interactive Implementation. Games and Economic Behavior. 27(1): 38-63.
Baliga, Sandeep and Tomas Sjostrom. 1998. Decentralization and Collusion. Journal of Economic Theory. 83(2): 196-232.
Baliga, Sandeep, Luis Corchon and Tomas Sjostrom. 1997. The Theory of Implementation when the Planner is a Player. Journal of Economic Theory. 77(1): 15-33.
Baliga, Sandeep and Roberto Serrano. 1995. Multilateral Bargaining with Imperfect Information. Journal of Economic Theory. 67(2): 578-589.
Working Papers
Baliga, Sandeep and Jeffrey Ely. 2015. Torture.
Baliga, Sandeep and Tomas Sjostrom. 2009. Conflict Games with Payoff Uncertainty.
Baliga, Sandeep and Tomas Sjostrom. 2009. Reputation and Conflict.
Baliga, Sandeep and Tomas Sjostrom. 2015. Coordination, Rent-Seeking and Control.
Baliga, Sandeep and Tomas Sjostrom. 2014. The Strategy of Conflict and the Technology of War.
Baliga, Sandeep and Roberto Serrano. Negotiations with Side-Deals.
Book Chapters
Baliga, Sandeep and Tomas Sjostrom. Forthcoming. "The Hobbesian Trap." In Oxford Handbook of the Economics of Peace and Conflict, edited by Michelle Garfinkel and Stergios Skaperdas, Oxford: Oxford University Press.
Baliga, Sandeep and Tomas Sjostrom. 2006. "Mechanism Design: Recent Developments." In The New Palgrave Dictionary of Economics, edited by L. Blume and S. Durlauf, vol. 2, London, UK: Palgrave Macmillan.
Baliga, Sandeep and Tomas Sjostrom. Forthcoming. "Durable Cheap Talk Equilibria." In Communication Games, edited by Richard Harbaugh, vol. 15, Holland: Elsevier.
Baliga, Sandeep and Eric Maskin. 2003. "Mechanism Design for the Environment." In Handbook of Environmental Economics, edited by Kenneth Arrow and Michael Intriligator (series eds.), Karl-Goran Maler and Jeffrey Vincent (vol. eds.), vol. 1, Netherlands: Elsevier Science.
Al-Najjar, NabilSandeep Baliga and Chris Forman. 2004. Sugar Daddy: Quotas and the U.S. Government. Case 5-204-255 (KEL001).
Al-Najjar, NabilSandeep Baliga and Chris Forman. 2004. Steel Wars: A Battle for the Future of American Steel. Case 5-204-256 (KEL002).

Print Teaching
Teaching Interests
Competitive strategy and industrial structure; crisis management; international relations
Full-Time / Part-Time MBA
Leadership and Crisis Management (KPPI-440-A)

This course counts toward the following majors: Social Enterprise

Formerly SEEK-440-A

In recent decades corporations have increasingly become the dominant source for political and social change. Increased globalization and technological progress have further accelerated this process. Businesses are now held accountable by standards other than legal compliance or financial performance. Successful business leaders have recognized that these challenges are best mastered by a commitment to values-based management. However, simply "doing the right thing" is not enough. Rather, companies increasingly find themselves as targets of aggressive legal action, media coverage and social pressure. Organizations must be prepared to handle rapidly changing environments and anticipate potential threats. This requires a deep understanding of the strategic complexities in managing various stakeholders and constituencies. To confront students with these challenges in a realistic fashion, the class is structured around a rich set of challenging case studies and crisis simulation exercises.

Executive MBA
Economics of Competition (MECNX-441-0)
Economics of Competition prepares students to diagnose the determinants of an industry’s structure and formulate rational, competitive strategies for coping with that structure.

Foundations of Managerial Economics I: Game Theory (MECS-460-3)
This course covers conflict and cooperation among rational decision makers in economic, political and social systems. Topics include games in extensive, normal and characteristic function forms; Nash equilibrium and refinements; Bayesian games; infinitely repeated games; stochastic games; Nash bargaining solution; and cooperative games. The course is self-contained but closely coordinated with ECON-410-3. Prerequisite: Knowledge of probability theory and elementary linear algebra; simultaneous enrollment in ECON-410-3 or permission of the instructor.

Conflict and Cooperation (MECS-473-0)
This course will offer a comprehensive theoretical treatment of conflict. Strategic interaction within and across nations involves conflict and cooperation. Disagreement between a country’s population and its leadership can cause internal conflict, oppression and terrorism. Disagreement between countries can lead to war, costly arms races and impede economic development. Conflict often arises even though there is some cooperative solution that would have satisfied all the relevant actors. We will study the fundamental causes of conflict (positive analysis) and possible solutions that create cooperation (normative analysis). Positive analyses will focus on conflict caused by payoff uncertainty or asymmetric information, the inability to commit to honor agreements, income inequality, fractionalization of the population into distinct and antagonistic groups and extremists who attempt to manipulate conflict to achieve their ends. This part of the course will cover topics such as the reciprocal fear of surprise attack, global games, wars of attrition, bargaining and coalition-formation. Normative analyses will focus on communication, mechanism design and institutions and their impact on cooperation. Communication of motives or confidence-building measures, such as allowing arms inspections, may diffuse tension. Or they may increase the chances of conflict by exposing the strength or weakness of a country’s arms capabilities. Asymmetric information may preclude implementation of cooperation even when transfers are available and it is possible to fully commit. Similarly, “moral hazard arising from a leader’s desire for political survival will affect the chances of conflict or cooperation. Different institutions have different commitment properties. For example, democratization gives the citizens a permanent voice in collective decision-making. This influences their incentives to revolt or accept the decisions of a leader. These issues apply equally across countries and can cause war or within a country and cause civil war. While the course is theoretical, we will offer stylized facts about war and civil war as motivation and a guide to interesting unexploited questions and puzzles. Unlike many topics in economics and political science, these issues are under-explored. We hope to generate interesting research questions