Daniel N Hauser's Website
I am a post doctoral researcher at Aalto University.
Dynamic Games, Reputation, Social Learning, Model Misspecification
I consider a model in which a firm invests in both product quality and a costly signaling technology, and the firm's reputation is the market's belief that its quality is high. Signaling influences the rate at which consumers’ receive information about quality: the firm can either promote, which increases the arrival rate of signals when quality is high, or censor, which decreases the arrival rate of signals when quality is low. I study how the firm's incentives to build quality and signal depend on its reputation and current quality. The firm's ability to promote or censor plays a key role in the structure of equilibria. Promotion and investment in quality are complements: the firm has stronger incentives to build quality when the promotion level is high. Costly promotion can, however, reduce the firm's incentive to build quality; this effect persists even as the cost of building quality approaches zero. Censorship and investment in quality are substitutes. The ability to censor can destroy a firm's incentives to invest in quality, because it can reduce information about poor quality products.
"Social Learning with Model Misspecification: A Framework and A Characterization," joint with Aislinn Bohren (R&R at Econometrica)
This paper explores model misspecification in the canonical observational learning framework. An agent's type specifies how he interprets private and public signals and how he believes others draw inference. This framework captures behavioral biases such as confirmation bias, underweighting or overweighting information, optimism bias and correlation neglect, as well as models of inference such as level-k and cognitive hierarchy. We develop a simple criterion to identify how behavioral biases in information processing and inference impact asymptotic learning. Depending on the nature of the bias, beliefs may converge to the incorrect state, the correct state, or not converge at all. Agents with different biases may hold different asymptotic beliefs, even though they are all observing the same sequence of prior actions. Next, we explore the optimal strategy of an information designer who can release costly public information and has a preference over the asymptotic beliefs of agents. The optimal timing, frequency and strength of public information depends crucially on the structure of model misspecification. This contrasts with the fully rational model, in which the timing, frequency and strength of information releases are irrelevant for asymptotic learning.
Work in Progress
"Misinterpreting Social Outcomes and Information Campaigns," joint with Aislinn Bohren (Extended Abstract)
Given the different inefficiencies that arise when agents are misspecified, it is natural to ask what types of policies will improve decision-making. In this paper, we explore how information campaigns can counteract inefficient choices. We study the optimal way for a social planner to release costly public information about the state. For example, this could entail a public health campaign to encourage parents to vaccinate their children or a savings campaign that encourages workers to invest in the stock market. We show that the duration (temporary or permanent) and targeting (intervene to correct inefficient action choices or intervene to reinforce efficient action choices) of the optimal information campaign depends crucially on the form of misspecification.
"Social Learning with Endogenous Order of Moves" joint with Pauli Murto and Juuso Välimäki
We extend the canonical social learning model to allow for free timing of actions. A group of agents, each endowed with some private information, are trying to learn some unknown state of the world by observing the actions taken by other agents. Agents make a single irreversible decision but, unlike in the canonical model, they can choose to wait in order to observe what decisions others make. Previous literature has understated the role of this endogenous timing in facilitating information aggregation; we demonstrate that in the most informative symmetric equilibrium information fully aggregates as the number of players becomes large. In this limit, we also calculate the speed of learning, and show that allowing for endogenous timing introduces delays and periods of innactivity, endogenizing timing enables information aggregates at a faster rate than in many previously studied settings.