Private Learning and Exit Decisions in Collaboration (joint with Yingni Guo) [pdf]
We study a collaboration model in continuous time, with a positive arrival rate of a success in both the good and the bad state. If the project is bad, players may privately learn about it. At any time, players can choose whether to exit and secure the positive payoff of an outside option, or to stay with the project and exert costly effort. A player's effort not only increases the probability of success, but also serves as an investment in private learning.
We identify an equilibrium with three phases. In all phases, uninformed players exert positive effort. Players who become informed and learn that the project is bad never exert effort. Because players benefit from the effort of the others, informed players may not exit immediately. In the first, "no-exit" phase, informed players do not exit. In the subsequent, "gradual-exit" phase, they exit with a finite rate. In the final, "immediate-exit" phase, informed players exit immediately. We find that effort levels may increase in the no-exit phase, if the markup of effort in the bad state is positive. Surprisingly, increasing the payoff of the outside option encourages collaboration.
Buyer-Optimal Learning and Monopoly Pricing (joint with Balázs Szentes) [pdf]
This paper analyzes a bilateral trade model where the buyer's valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to the buyer. Our goal is to characterize those signal structures which maximize the buyer's expected payoff. We identify a buyer-optimal signal structure which generates (i) efficient trade and (ii) a unit-elastic demand. Furthermore, we show that every other buyer-optimal signal structure yields the same outcome as the one we identify, in particular the same price.Information Disclosure in Markets: Auctions, Contests and Matching Markets [pdf]
We study the impact of information disclosure on equilibrium properties in a general model of a two-sided matching market that incorporates a large class of market design environments. In this model, each agent first privately observes an informative, but potentially noisy, signal about his private type. The agents then enter a matching stage in which they choose signaling investments to compete for match partners. In order to study the impact of information disclosure, we introduce a criterion that orders signals in terms of their informativeness. We show that information disclosure increases the expected total match output but may also increase wasteful signaling investments due to amplified competition within groups. The second effect may dominate, leading to a decrease in expected welfare. Disclosure effects on equilibrium properties depend on whether information is disclosed to agents on the short or the long side of the market. Implications of our findings to auctions, contests and matching markets are discussed.
Mechanism Design with Endogenous Information [pdf]
In mechanism design problems with endogenous information, regularity properties of the distribution of posterior estimates (types) are essential for tractability. Important properties are a monotone hazard rate, increasing virtual valuations or costs. Difficulties arise since these properties are not preserved under mixtures, and regularity of the prior distribution may not translate to the distribution of posterior types. In this note, we identify sufficient conditions on the primitives of an information structure, which guarantee that the distribution of posterior types has a monotone hazard rate, increasing virtual valuations or costs. These characterization results make it possible to study mechanism design problems with endogenous information, without imposing regularity conditions on the interim stage or restricting attention to specific information structures. Applications to information acquisition and disclosure in optimal auctions, and to allocation problems without money are discussed.
Preference Uncertainty and Conflict of Interest in Committees [pdf]
We propose and analyze a committee model, in which agents with interdependent values vote on whether to accept an alternative or to stick to the status quo. Agents hold two-dimensional private information: About a dimension of the payoff state, and about their individual preference type, which reflects an agent's level of partisanship.
In equilibrium committee members adopt cutoff-strategies, and an agent's preference type is reflected in his acceptance standard. We identify how the composition of a committee affects its decisions: As the population of committee members becomes more partisan, agents adjust their acceptance standards more, and equilibrium cutoffs move away from the sincere voting threshold. By contrast, an agent who finds himself in a committee with more heterogeneity of preference types, is more uncertain about the preferences of others, and hence bases his vote more on his own, privately observed signal.