Working Papers:
1. "On Linear Transformations of Intersections" (with Alexey Kushnir)
- Current version: September, 2017; First version: April, 2017.
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.
2. "Monotone Equilibria in Signalling Games" (with Harry Di Pei)
- Current version: April, 2018; First version: April, 2017.
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.
3. "Delegating Performance Evaluation" (with Igor Letina and Nick Netzer)
- Current version: March, 2018; First version: November, 2016.
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.
4. "Targeted Information and Limited Attention" (with Andreas Hefti)
- Current version: April, 2017; First version: June, 2016.
Abstract: We examine the implications of limited consumer attention for the decisions of competing firms which consumers to target with their messages. Limited attention changes the conventional strategic role of targeted information, as information-senders may profitably intrude a competitor’s segment of prime consumers. Therefore, the presence of inattentive consumers can incentivize firms to behave as mass-advertisers, even if firms had the ability to direct their messages at infinite precision towards consumers with the most aligned preferences. Anticipating that the equilibrium information provision will not reflect their preferences, consumers with high nuisance costs optimally decide to block information. This adverse effect of information dissemination can explain the recently observed increased use of ad blocking tools by consumers, which has become a key issue to the entire advertising industry. Within the targeting framework, we further analyze the consequences of limited attention for the determinants of market shares, information taxation, attention competition between firms, the value of marketing data to firms, consumer privacy concerns and firm pricing strategies.
5. "On the Equivalence of Bayesian and Dominant Strategy Implementation for Environments with Non-Linear Utilities"
(with Alexey Kushnir)
- Current version: January, 2018; First version: November, 2015.
Abstract: We extend the equivalence between Bayesian and dominant strategy implementation (Manelli and Vincent, Econometrica, 2010; Gershkov et al. Econometrica, 2013) to environments with agent utilities being non-linear in allocations and satisfying a convex-valued assumption. The new equivalence result produces novel implications to the literature on the principal-agent problem with allocative externalities, environmental mechanism design, and public good provision.
6. "Voting with Public Information"
- Current version: June, 2017; First version: April, 2015.
- Runner-up, Wicksell Prize, EPCS 2015.
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 anonymous and 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.
Work in Progress:
7. "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, where consumer preferences may or may not be correlated, and firms compete for consumers by influencing the perceptions of products. By obfuscating the properties of their products or by means of other activities, such as deceptive, evocative or emotional advertising or shockvertising, firms introduce noise to the perceived valuations of consumers. We show that such noise is harmful for firms if the preference distribution is polarized. 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 end up with the wrong good, not only with higher prices.
8. "Managerial Uncertainty and (De)centralized Decision Making" (with Dimitri Migrow)
1. "On Linear Transformations of Intersections" (with Alexey Kushnir)
- Current version: September, 2017; First version: April, 2017.
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.
2. "Monotone Equilibria in Signalling Games" (with Harry Di Pei)
- Current version: April, 2018; First version: April, 2017.
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.
3. "Delegating Performance Evaluation" (with Igor Letina and Nick Netzer)
- Current version: March, 2018; First version: November, 2016.
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.
4. "Targeted Information and Limited Attention" (with Andreas Hefti)
- Current version: April, 2017; First version: June, 2016.
Abstract: We examine the implications of limited consumer attention for the decisions of competing firms which consumers to target with their messages. Limited attention changes the conventional strategic role of targeted information, as information-senders may profitably intrude a competitor’s segment of prime consumers. Therefore, the presence of inattentive consumers can incentivize firms to behave as mass-advertisers, even if firms had the ability to direct their messages at infinite precision towards consumers with the most aligned preferences. Anticipating that the equilibrium information provision will not reflect their preferences, consumers with high nuisance costs optimally decide to block information. This adverse effect of information dissemination can explain the recently observed increased use of ad blocking tools by consumers, which has become a key issue to the entire advertising industry. Within the targeting framework, we further analyze the consequences of limited attention for the determinants of market shares, information taxation, attention competition between firms, the value of marketing data to firms, consumer privacy concerns and firm pricing strategies.
5. "On the Equivalence of Bayesian and Dominant Strategy Implementation for Environments with Non-Linear Utilities"
(with Alexey Kushnir)
- Current version: January, 2018; First version: November, 2015.
Abstract: We extend the equivalence between Bayesian and dominant strategy implementation (Manelli and Vincent, Econometrica, 2010; Gershkov et al. Econometrica, 2013) to environments with agent utilities being non-linear in allocations and satisfying a convex-valued assumption. The new equivalence result produces novel implications to the literature on the principal-agent problem with allocative externalities, environmental mechanism design, and public good provision.
6. "Voting with Public Information"
- Current version: June, 2017; First version: April, 2015.
- Runner-up, Wicksell Prize, EPCS 2015.
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 anonymous and 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.
Work in Progress:
7. "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, where consumer preferences may or may not be correlated, and firms compete for consumers by influencing the perceptions of products. By obfuscating the properties of their products or by means of other activities, such as deceptive, evocative or emotional advertising or shockvertising, firms introduce noise to the perceived valuations of consumers. We show that such noise is harmful for firms if the preference distribution is polarized. 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 end up with the wrong good, not only with higher prices.
8. "Managerial Uncertainty and (De)centralized Decision Making" (with Dimitri Migrow)
Research Notes:
"A Note on Lavi, Mu'alem and Nisan (2009)" (April 2014, 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.
"A Note on Lavi, Mu'alem and Nisan (2009)" (April 2014, 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.
