Research

Publications

Long-Run Choice Anomalies in Reinforcement Learning with Bounded Memory (with Erin Giffin) (Journal of Economic Behavior & Organization)

Violations of expected utility (EU) maximization have been demonstrated in many settings; however, anomalies are often reduced after repeated choices.  We examine if sufficient experiential learning allows convergence to EU-maximization.  In the model, a decision maker with long but finite memory repeatedly makes choices in the same decision problem with uncertainty.  We focus on the existence and severity of a certain unambiguous type of long-run choice anomaly: ranking reversals (a non-EU maximizing action being most frequently chosen in the long run).  We show reversals exist for almost all preferences, even in realistic examples.  Reversals tend to happen when payoff differences are heavily skewed.  Longer memory does not eliminate the possibility of ranking reversals, but it does make reversals less severe.  Our key takeaway is that finite memory can produce major violations of the expected utility ranking even in a model where both memory and the decision-making process are unbiased.

Reselling Information (with S. Nageeb Ali and Ayal Chen-Zion) (Games and Economic Behavior)

Information can be simultaneously consumed, replicated, and sold to others. We study how resale affects a decentralized market for information. Even if the initial seller is an informational monopolist, she captures non-trivial rents from at most a single buyer in any Markovian equilibrium: in the frequent-offer limit, her payoffs converge to 0 once a single buyer buys information. By contrast, there exists a non-Markovian “prepay equilibrium” where payment is extracted from most buyers before information is sold. This prepay equilibrium exploits buyers' ability to resell information and results in the seller achieving (approximately) the same payoff that she would were resale prohibited. 

Risk Preferences and Incentives for Evidence Acquisition and Disclosure (with Erin Giffin) (Journal of Law, Economics, and Organization) Online Appendix

Civil disputes feature parties with biased incentives acquiring evidence with costly effort. Evidence may then be revealed at trial or concealed to persuade a judge or jury. Using a persuasion game, we examine how a litigant's risk preferences influence evidence acquisition incentives. We find that high risk aversion depresses equilibrium evidence acquisition. We then study the problem of designing legal rules to balance good decision making against the costs of acquisition. We characterize the optimal design, which differs from equilibrium decision rules. Notably, for very risk-averse litigants, the design is "over-incentivized" with stronger rewards and punishments than in equilibrium. We find similar results for various common legal rules, including admissibility of evidence, maximum penalties, and maximum awards. These results have implications for how rules could differentiate between high risk aversion types (e.g., individuals) and low risk aversion types (e.g., corporations) to improve evidence acquisition efficiency.

Working Papers

Strategic Cyberwarfare (with Rishi Sharma) (Under submission at Economic Inquiry)

This paper develops a theoretical model of cyberwarfare between nations, focusing on the factors that determine the severity and outcomes of cyber conflicts. We introduce a two-country model where nations invest in offensive or defensive cyber capabilities across networked systems. We show that resource expenditure intensifies when players' effective values are similar, which can help explain the rise of cyberwarfare. We explore the implications of network structures, showing how larger attack surfaces worsen outcomes for defenders. Additionally, we investigate the impact of private cyber defence provision, and find that centralized policies may either improve or exacerbate cyber conflict.

Long-Run Efficiency with Local Interactions and Heterogeneous Types (Under submission at Games and Economic Behavior)

People often engage in strategic interactions in different locations. Previous literature with homogeneous player preferences showed that location choice causes evolutionary selection in favor of efficient equilibria. In the context of 2 x 2 games with two heterogeneous types, this paper characterizes the long-run equilibria in two interesting classes of games, Opposing Coordination (OC) games and Coordination/Anti-coordination (CA) games. In OC games, the long-run equilibria are all efficient and feature segregation of the two types. This results from strategic homophily, because the two types disagree about which equilibrium is efficient. In CA games, the long-run equilibria all feature mixing of types, which is inefficient for the coordination type. Moreover, if miscoordination is harmful enough, there is a second inefficiency: the coordination types may play their inefficient strategy. This results from the strategic heterophily of the anti-coordination types.

Optimal Information Design for Reputation Building

Conventional wisdom holds that ratings and review platforms serve consumers best when they reveal the maximum amount of information to consumers at all times. This paper shows within a stylized model how this may not be true. The channel is that partial information may incentivize reputation-minded firms to invest more in quality. Committing to publish all reviews can lead to a "cold start problem," where there is a failure to attract early adopters, thereby shutting down the source of information. To find a solution to this problem, I use a dynamic Bayesian Persuasion model in which a long-run firm with a persistent type interacts with a sequence of short-run consumers. When the platform designs the public information policy to maximize total consumer welfare, there is a policy with three phases that converges to optimal as reviews become frequent. In the first phase, the platform reveals reviews with an interior probability and consumers learn about the firm. In the second phase, the consumers observe all reviews, and the firm always produces high quality. Finally, in the third phase, new reviews are hidden entirely and the firm produces low quality without damage to its reputation. When the designer has weaker commitment power and may revise its policy at a small cost, a repeated three phase policy is robust to revisions and remains optimal.

Works in Progress

Evolutionary Game Theory on Networks (with Shahir Safi)