Research Statement [PDF]

Working Papers

• Selling Authority [PDF][Slide]
  
  Abstract: Conflict of interests between an uninformed principal and an informed agent prevents the principal from fully using the agent’s information when making a decision. This informational loss often results in a socially undesirable outcome. In this paper, we show that inefficiency caused by the informational loss can be resolved via bargaining with monetary transfers to efficiently reallocate decision-making authority. We consider a game in which an informed but self-interested agent makes a price offer for decision-making authority to the uninformed principal who then decides either to accept or to reject the offer. No matter how large the difference between parties’ preferences, there exists a continuum of perfect Bayesian equilibria, each of which yields an ex-post efficient action for any realization of the state. Furthermore, any equilibrium outcome is ex-ante Pareto superior to several dispute-resolution schemes studied in the framework of Crawford and Sobel (1982, Econometrica) and Holmstrom (1977) when the parties’ preferences are substantially misaligned.
  
  　

• Communication in Bargaining over Decision Rights [PDF][Slide](Job market paper)
  
  Abstract: This paper develops a model of bargaining over decision rights between an uninformed principal and an informed but self-interested agent. The uninformed principal makes a price offer to the agent who then decides either to accept or to reject the offer. Contrary to the prediction the Coase Theorem provides, actions induced in the unique perfect Bayesian equilibrium do not always satisfy ex-post efficiency. Once we introduce explicit communication into the model, however, there exists a truth-telling perfect Bayesian equilibrium in which the induced actions satisfy ex-post efficiency. The truth-telling equilibrium outcome is ex-ante Pareto superior to that of several dispute-resolution schemes studied in the framework of Crawford and Sobel (1982) and Holmstrom (1977).
  
  　

• Raising Revenue With Raffles: Evidence from a Laboratory Experiment. [PDF]
  (with Alexander Matros and Theodore L. Turocy)
  
  Abstract: Lottery and raffle mechanisms have a long history as economic institutions for raising funds. In a series of laboratory experiments we find that total spending in
  raffles is higher than Nash equilibrium predicts. Moreover, this overspending is persistent as the number of participants in the raffle increases. Using learning direction theory as a guide, we find that as the group size increases, subjects strategically adjust
  their spending levels less frequently in response to previous outcomes. Quantal response equilibrium organizes the observed distribution of choices for all group sizes, with the estimated noise parameter increasing as group size increases.

  　

Publication

• Contests with a Stochastic Number of Players [PDF]
  (with Alexander Matros), Games and Economic Behavior, 67 (2), November 2009, 584-597.
  
  Abstract: We study Tullock's (1980) n-player contest when each player has an independent probability 0 < p <1 of participating. A unique symmetric equilibrium is found for any n and p and its properties are analyzed. In particular, we show that for a fixed n > 2 individual equilibrium spending as a function of p is single-peaked and satisfies a single-crossing property for any two different numbers of potential players. However, total equilibrium spending is monotonically increasing in p and n. We also demonstrate that ex-post over-dissipation is a feature of the pure-strategy equilibrium in our model. It turns out that if the contest designer can strategically decide whether to reveal the actual number of participating players or not, then the actual number of participants is always revealed.
  
  　

 Works in Progress

• Authority and Communication: An Experimental Study. (with Ernest Kong-Wah Lai)