Publication:
1. "On the Equivalence of Bayesian and Dominant Strategy Implementation for Environments with Non-Linear Utilities,"
with Alexey Kushnir, Economic Theory, forthcoming.
Working Paper:
1. "Designing Organizations in Volatile Markets," with Dimitri Migrow, Job Market Paper 1.
Abstract: Multinational and multiproduct firms often experience uncertainty in the relative return of conducting activities in different markets, which could be due to, for example, exchange rate volatility or the changing prospects of different products. We study how a multi-divisional organization should optimally allocate decision-making authority to its managerial members when operating in such volatile markets. To be able to adapt its decisions to local conditions, the organization has to rely on self-interested division managers to collect and disseminate the relevant information. We show that if communication takes the form of verifiable disclosure, then centralized decision-making does not suffer from information asymmetry and it allows the headquarter of the organization to better cope with the inter-market uncertainty. On the cost side, centralization can discourage information acquisition, and this negative effect is amplified by the need for coordinating the activities of different divisions. As a result, the optimality of decentralized decision-making can actually be driven by a large coordination motive.
2. "Delegating Performance Evaluation," with Igor Letina and Nick Netzer, Job Market Paper 2.
Abstract: We study optimal incentive contracts with multiple agents when performance evaluation is delegated to a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal determines a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer’s potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap. Our analysis has implications for applications as diverse as the design of worker compensation, the awarding of research grants, and the allocation of foreign aid.
3. "Voting with Public Information," R&R at Games and Economic Behavior.
Abstract: We study the effect of public information on collective decision-making in committees, where members can have both common and conflicting interests. In the presence of public information, the simple and efficient vote-your-signal strategy profile no longer constitutes an equilibrium under the commonly-used simultaneous voting rules, while the intuitive but inefficient follow-the-expert strategy profile almost always does. Although more information may be aggregated if agents are able to coordinate on more sophisticated equilibria, inefficiency can persist even in large elections if the provision of public information introduces general correlation between the signals observed by the agents. We propose simple voting procedures that can indirectly implement the outcomes of optimal ex post incentive compatible mechanisms with public information. The proposed voting procedures also have additional advantages when there is a concern for strategic disclosure of public information.
4. "Targeted Information and Limited Attention," with Andreas Hefti, R&R at the RAND Journal of Economics.
Abstract: We examine the implications of limited consumer attention for the targeting decisions of competing firms. Limited attention alters the strategic role of information provision as firms may be incentivized to behave as mass advertisers, despite potentially perfect targeting abilities. We analyze the consequences of limited attention for market shares, information taxation, attention competition between firms, the value of marketing data to firms and strategic pricing. Accounting for limited attention in an otherwise standard targeting framework can explain several recent key issues from the advertising industry, such as increased consumer ad blocking, privacy concerns and information overload.
5. "Confusion, Polarization and Competition," with Andreas Hefti and Armin Schmutzler.
Abstract: Do firms seek to make a market transparent or do they want to manipulate the perception of product characteristics? We study this question in a duopoly model with differentiated goods. By obfuscating the properties of their products or by suitable advertising activities, firms can introduce noise to the perceived valuations of consumers. We show that such noise is harmful for firms if the true preference distribution is polarized, so that indifferent consumers are relatively rare. In such situations, firms seek to educate consumers. On the contrary, obfuscation arises in equilibrium if the preference distribution features a concentration of undecided consumers. Compared to the case of homogeneous goods, the welfare consequences of obfuscation are more severe as consumers may not only pay higher prices, but also end up with the wrong good.
6. "Monotone Equilibria in Signalling Games," with Harry Di Pei.
Abstract: We study the monotonicity of sender’s equilibrium strategy with respect to her type in signalling games. We use counterexamples to show that when the sender’s payoff is non-separable, the Spence-Mirrlees condition cannot rule out equilibria in which the sender uses non-monotone strategies. These equilibria can survive standard refinements as incentives are strict and the sender plays every action with positive probability. We provide sufficient conditions under which the sender’s strategy is monotone in every Nash equilibrium. Our conditions require the sender’s payoff to have strictly increasing differences between the state and the action profile and to be monotone with respect to each player’s action. We also identify and fully characterize a novel property on the sender’s payoff that we call increasing absolute differences over distributions, under which every pair of distributions over the receiver’s actions can be ranked endogenously. Our sufficient conditions fit into a number of applications, including advertising, warranty provision, education and job assignment.
7. "On Linear Transformations of Intersections," with Alexey Kushnir.
Abstract: For any linear transformation and two convex closed sets, we provide necessary and sufficient conditions for when the transformation of the intersection of the sets coincides with the intersection of their images. We also identify analogous conditions for non-convex sets, general transformations, and multiple sets. We demonstrate the usefulness of our results via an application to the economics literature of mechanism design.
1. "On the Equivalence of Bayesian and Dominant Strategy Implementation for Environments with Non-Linear Utilities,"
with Alexey Kushnir, Economic Theory, forthcoming.
Working Paper:
1. "Designing Organizations in Volatile Markets," with Dimitri Migrow, Job Market Paper 1.
Abstract: Multinational and multiproduct firms often experience uncertainty in the relative return of conducting activities in different markets, which could be due to, for example, exchange rate volatility or the changing prospects of different products. We study how a multi-divisional organization should optimally allocate decision-making authority to its managerial members when operating in such volatile markets. To be able to adapt its decisions to local conditions, the organization has to rely on self-interested division managers to collect and disseminate the relevant information. We show that if communication takes the form of verifiable disclosure, then centralized decision-making does not suffer from information asymmetry and it allows the headquarter of the organization to better cope with the inter-market uncertainty. On the cost side, centralization can discourage information acquisition, and this negative effect is amplified by the need for coordinating the activities of different divisions. As a result, the optimality of decentralized decision-making can actually be driven by a large coordination motive.
2. "Delegating Performance Evaluation," with Igor Letina and Nick Netzer, Job Market Paper 2.
Abstract: We study optimal incentive contracts with multiple agents when performance evaluation is delegated to a reviewer. The reviewer may be biased in favor of the agents, but the degree of bias is unknown to the principal. We show that a contest, which is a contract in which the principal determines a set of prizes to be allocated to the agents, is optimal. By using a contest, the principal can commit to sustaining incentives despite the reviewer’s potential leniency bias. The optimal effort profile can be uniquely implemented by an all-pay auction with a cap. Our analysis has implications for applications as diverse as the design of worker compensation, the awarding of research grants, and the allocation of foreign aid.
3. "Voting with Public Information," R&R at Games and Economic Behavior.
Abstract: We study the effect of public information on collective decision-making in committees, where members can have both common and conflicting interests. In the presence of public information, the simple and efficient vote-your-signal strategy profile no longer constitutes an equilibrium under the commonly-used simultaneous voting rules, while the intuitive but inefficient follow-the-expert strategy profile almost always does. Although more information may be aggregated if agents are able to coordinate on more sophisticated equilibria, inefficiency can persist even in large elections if the provision of public information introduces general correlation between the signals observed by the agents. We propose simple voting procedures that can indirectly implement the outcomes of optimal ex post incentive compatible mechanisms with public information. The proposed voting procedures also have additional advantages when there is a concern for strategic disclosure of public information.
4. "Targeted Information and Limited Attention," with Andreas Hefti, R&R at the RAND Journal of Economics.
Abstract: We examine the implications of limited consumer attention for the targeting decisions of competing firms. Limited attention alters the strategic role of information provision as firms may be incentivized to behave as mass advertisers, despite potentially perfect targeting abilities. We analyze the consequences of limited attention for market shares, information taxation, attention competition between firms, the value of marketing data to firms and strategic pricing. Accounting for limited attention in an otherwise standard targeting framework can explain several recent key issues from the advertising industry, such as increased consumer ad blocking, privacy concerns and information overload.
5. "Confusion, Polarization and Competition," with Andreas Hefti and Armin Schmutzler.
Abstract: Do firms seek to make a market transparent or do they want to manipulate the perception of product characteristics? We study this question in a duopoly model with differentiated goods. By obfuscating the properties of their products or by suitable advertising activities, firms can introduce noise to the perceived valuations of consumers. We show that such noise is harmful for firms if the true preference distribution is polarized, so that indifferent consumers are relatively rare. In such situations, firms seek to educate consumers. On the contrary, obfuscation arises in equilibrium if the preference distribution features a concentration of undecided consumers. Compared to the case of homogeneous goods, the welfare consequences of obfuscation are more severe as consumers may not only pay higher prices, but also end up with the wrong good.
6. "Monotone Equilibria in Signalling Games," with Harry Di Pei.
Abstract: We study the monotonicity of sender’s equilibrium strategy with respect to her type in signalling games. We use counterexamples to show that when the sender’s payoff is non-separable, the Spence-Mirrlees condition cannot rule out equilibria in which the sender uses non-monotone strategies. These equilibria can survive standard refinements as incentives are strict and the sender plays every action with positive probability. We provide sufficient conditions under which the sender’s strategy is monotone in every Nash equilibrium. Our conditions require the sender’s payoff to have strictly increasing differences between the state and the action profile and to be monotone with respect to each player’s action. We also identify and fully characterize a novel property on the sender’s payoff that we call increasing absolute differences over distributions, under which every pair of distributions over the receiver’s actions can be ranked endogenously. Our sufficient conditions fit into a number of applications, including advertising, warranty provision, education and job assignment.
7. "On Linear Transformations of Intersections," with Alexey Kushnir.
Abstract: For any linear transformation and two convex closed sets, we provide necessary and sufficient conditions for when the transformation of the intersection of the sets coincides with the intersection of their images. We also identify analogous conditions for non-convex sets, general transformations, and multiple sets. We demonstrate the usefulness of our results via an application to the economics literature of mechanism design.
Research Notes:
1. "A Note on Jackson and Yariv (2017)."
Abstract: In this short note, I provide a generalization of the main results of Jackson and Yariv (2017) on the (non-)existence of representative agents.
2. "A Note on Lavi, Mu'alem and Nisan (2009)," with Alexey Kushnir.
Abstract: Lavi, Mu'alem and Nisan (2009) provide two simplified and insightful proofs for the celebrated Roberts' Theorem (Roberts, 1979). In this short note, we correct a mistake in their first proof.
1. "A Note on Jackson and Yariv (2017)."
Abstract: In this short note, I provide a generalization of the main results of Jackson and Yariv (2017) on the (non-)existence of representative agents.
2. "A Note on Lavi, Mu'alem and Nisan (2009)," with Alexey Kushnir.
Abstract: Lavi, Mu'alem and Nisan (2009) provide two simplified and insightful proofs for the celebrated Roberts' Theorem (Roberts, 1979). In this short note, we correct a mistake in their first proof.
