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Here you will find some of my recent research papers. Most are works in progress or are under revision. Please feel welcome to contact me if you are interested in a paper that is not available for download. Comments, suggestions, and corrections are appreciated.

drafts / working papers

Multi-period Matching (with Sangram V. Kadam)

abstract We examine a multi-period, two-sided matching market without monetary transfers. We identify sufficient conditions of the existence of ex ante and dynamically-stable matchings and we investigate the properties of the core. Matchings derived through repeated spot markets may be unstable, even if agents' preferences exhibit inertia or status quo bias. We extend our analysis to accommodate uncertainty and path-dependent learning about future preferences. Dynamically-stable matchings, which exhibit a no-regret property, can be identified using matching procedures that leverage only the limited information held by agents. We relate our analysis to market unraveling, to the exposure problem, and to the importance of commitment, or lack thereof, in dynamic markets.
download [ pdf ] Working Paper (June 13, 2014).

The War of Attrition and the Revelation of Valuable Information (with Fei Li)

abstract We provide a simple example demonstrating that the unconditional revelation information in a war of attrition with private budget constraints can decrease expected revenue. Our example suggests that information non-revelation can counteract the adverse revenue impact of budget constraints and almost counterbalance their otherwise negative impact.
download [ pdf ] Working Paper (June 11, 2014).

Rules and Standards when Compliance Costs are Private Information (with David A. Weisbach and Richard J. Zeckhauser)

abstract We consider the choice between rules and standards when the regulated agents have private information about their compliance costs. The choice may affect the ability of a regulator seeking to maximize net benefits to infer these costs. Rules are set ex ante so the regulator cannot make inferences regarding private costs by observing behavior. Rules, however, offer agents clarity concerning the required level of care ex ante. Standards give content to a regulation after agents have taken some initial action, in anticipation of the regulating bureau's directive. Observing those actions may allow the bureau to make inferences about agents' costs. By leveraging the private information revealed by agents' actions, standards allow for responsive regulation. However, they expose agents to adjustment costs when they mis-judge the required level of care before it is set. Our comparison of the two regulatory regimes identifies nuanced trade-offs. We compare rules and standards in this framework. The greater the uncertainty about compliance costs and the lower are adjustment costs, the greater the relative attractiveness of standards. If some agents are large relative to the market, those agents will choose their actions strategically to influence the ultimate standard. Rules, in contrast, are immune to strategic posturing. We discuss applications to financial regulation.

Signaling with Audits: Mimicry, Wasteful Expenditures, and Non-Compliance in a Model of Tax Enforcement (with David A. Weisbach and Richard J. Zeckhauser)

abstract The audit policy of a tax authority can signal its audit effectiveness. We model this process and show that in limited circumstances an ineffective authority can masquerade as being effective. We show that high maximal penalties imply underreporting of income.
download [ link ] HKS Faculty Research Working Paper RWP14-001 (January 27, 2014).

If Many Seek, Ye Shall Find: Search Externalities and New Goods (with Richard J. Zeckhauser)

abstract We study the productive role of consumer search in an economy with multiple goods. Said activity can help create a market for new goods. In equilibrium, search promotes the sorting of consumers among producers, potentially increasing welfare and profits compared to the benchmark case. That benchmark is an economy without search where only a single good trades. When direct competitors are few, a firm may benefit if their numbers increase, as more sellers may encourage consumers to search. Consumer search makes it worthwhile for producers of new goods to enter the market. Neither of these externalities, nor the coordination problems faced by consumers and producers, is appropriately recognized in the literature.
download [ pdf ] Working Paper (March 1, 2014).
[ pdf ] Presentation Slides (June 1, 2014).

Trading Networks and Equilibrium Intermediation (with C. Matthew Leister)

abstract We consider a network of intermediaries facilitating exchange between buyers and a seller. Intermediary traders face a private trading cost, a network characterizes the set of feasible transactions, and an auction mechanism sets prices. We examine stable and equilibrium networks. Stable networks, which are robust to agents' collusive actions, exist when cost uncertainty is acute and multiple, independent trading relationships are valuable. A free-entry process governs the formation of equilibrium networks. Such networks feature too few intermediaries relative to the optimal market organization and they exhibit an asymmetric structure amplifying the shocks experienced by key intermediaries. Welfare and empirical implications of stable and equilibrium networks are investigated.
download [ pdf ] Working Paper (June 10, 2014).

First-Price Auctions with Budget Constraints

abstract Consider a first-price sealed-bid auction where participants have affiliated valuations and private budget constraints; that is, bidders have private multidimensional types. This article investigates the existence and nature of monotone equilibria in this setting. Hard budget constraints introduce two competing effects on bidding. The direct effect depresses bids as participants hit their spending limit. The strategic effect encourages more aggressive bidding by participants with large budgets. Together these effects can yield discontinuous equilibrium strategies stratifying competition along the budget dimension. The strategic consequences of private budget constraints can be a serious confound in interpreting bidding behavior in auctions.
download [ pdf ] Working Paper (March 23, 2013).
[ pdf ] Presentation Slides (March 2013).

Engineered Ambiguity in the Principal-Agent Problem

abstract We consider a principal-agent problem with moral hazard. The agent is ambiguity averse and the principal can be ambiguous concerning the contract's evaluative criteria. For example, the contract may promise a reward if output is "sufficiently high" but may not precisely specify what the appropriate threshold is or how it is/will be determined. Although ambiguity makes it more difficult to secure the agent's participation, the principal can exploit it to relax incentive constraints. We show that the optimal contract features ambiguity and allows the principal to implement an action at strictly lower cost than with a fully precise contract. When employing a vague contract the principal has added incentive to conceal the benefits she derives from the principal-agent relationship.
download [ pdf ] Working Paper (Coming Soon).

On Asymmetric Reserve Prices

abstract We investigate equilibrium bidding in standard auctions with asymmetric reserve prices. For example, the auctioneer sets a low reserve price for one subset of bidders and a high reserve price for others. In the first-price auction we identify an equilibrium reserve price externality whereby bidders facing a high reserve price benefit from a reduction of opponents' reserve prices. We also document cases where introducing asymmetric reserve prices can increase the auctioneer's expected revenue compared to an optimal uniform reserve price - even if all bidders are ex ante identical. An extension of the model characterizes equilibrium bidding in asymmetric first-price auctions with asymmetric reserve prices. The use of asymmetric reserve prices in auction design is discussed.
download [ pdf ] Working Paper (April 6, 2014).

First-Price Auctions with Budget Constraints: An Experiment

download [ pdf ] Working Paper. Currently under revision, please e-mail me if you are interested in the latest version. (March 2010)

published / forthcoming papers

Audits as Signals (with David A. Weisbach and Richard J. Zeckhauser)

publication [ link ] University of Chicago Law Review 81(1):179-202, 2014.
download [ link ] University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 651 (August 16, 2013).

On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints (with Fei Li)

publication [ link ] Games and Economic Behavior 85C:84-108, 2014.
download [ link ] PIER Working Paper 14-001 (January 10, 2014).

Bribing in First-Price Auctions: Corrigendum (with Shiran Rachmilevitch)

publication [ link ] Games and Economic Behavior (Forthcoming).
download [ pdf ] Working Paper (February 15, 2013).

Auction Choice for Ambiguity-Averse Sellers Facing Strategic Uncertainty: Comment

publication [ link ] Games and Economic Behavior 72(2):448-451, 2011.
download [ pdf ] Working Paper (July 10, 2010).

permanent working papers / archive

Here are some old projects which I am no longer actively pursuing. Please contact me if you are interested in any of the research below. Its mildly eclectic.

Hull Clubs and British Maritime Insurance, 1720-1840

abstract In the late 1700s and early 1800s, "hull clubs" or mutual insurance associations emerged as providers of marine insurance in Britain. While playing a tertiary role to the private underwriting at Lloyd's and to the insurance companies, the not-for-profit hull clubs were capable of offering their members competitively priced and comprehensive coverage. Despite their benefits, hull club insurance became de jure only among certain classes of shipping, such as colliers from the North-East. Two complementary factors led to hull clubs' sectoral concentration. First, clubs specialized in providing time policies, which were especially attractive to shipping engaged in high frequency trade. Second, the price uncertainty associated with club insurance made it a "riskier" purchase than commercially available policies. Examining the risk preferences of club members suggests that they exhibited a remarkably low level of risk aversion. These reinforcing factors contributed to hull clubs' niche status in the early nineteenth century maritime insurance market and constrained their initial growth.
download [ pdf ] Working Paper (March 20, 2007).
data [ xls ] Insurance Rates at Lloyd's of London by Shipping Route (1810-16).
[ xls ] Rates and Accounts of Hull Clubs in N.E. England (1810-35).
[ xls ] Ships Insured in the Coal Trade Association, South Shields (1828).
notes This paper was written for the economic history requirement in the PhD program at UC Berkeley. I have not worked on this paper since 2007. It is made available as a service for others who may be interested in exploring this topic further. The history of insurance is fascinating!

Voucher Auctions

abstract Voucher auctions are non-standard mechanisms that can be used to quickly allocate shares of multiple items among rivalrous parties. Variants of such mechanisms have been employed in the mass privatizations in Eastern and Central Europe. Despite their use, voucher auctions as mechanisms in their own right have received little theoretical or experimental attention. This pa- per considers simple voucher auctions, characterizes equilibria, and examines their performance in a controlled laboratory setting. Voucher auctions are shown to have intuitively appealing and well-behaved equilibria. Experiments suggest that they are a useful alternative mechanism when optimal schemes are either infeasible or unknown.
download [ pdf ] Working Paper (November 23, 2009).
data [ xls ] Data from the experiments.
supplements [ pdf ] Poster (Presented at the Jerusalem Summer School in Economic Theory, June 2009).
[ pdf ] Presentation Slides for the Midwest Economics Association Meeting (Evanston, 2010) and the IAES Meeting (Prague, 2010).

other documents / professional matters

In compliance with conflict of interest policies at Harvard Kennedy School, here [ pdf ] you can find a statement outlining my outside professional activities and potential conflicts of interest.