Research
Work in progress
"Coasian Dynamics in Sequential Search" with Cole Williams [Working Paper] CEPR Discussion Paper No. DP17907
Abstract: Consumer-tracking technology offers new tools for price discrimination in digital markets. We examine the impact of sellers using this technology to adjust prices according to a buyer’s prior search length in a competitive search market where buyers differ in patience. We find “Coasian equilibria” wherein sellers reduce prices for buyers with longer search lengths which in turn requires them to reduce prices for buyers with shorter search lengths. In commonly studied environments, Coasian equilibria not only yield higher welfare for every buyer than all uniform-pricing equilibria, but are also the only equilibria when some mass of buyers are arbitrarily patient.
"Search and Price Discrimination Online" Accepted in JPE: Micro, [Working Paper] CEPR Discussion Paper No. DP15729
Public engagement: Christie Conference 2021, Teachers' Day 2022
Abstract: This paper theoretically studies price discrimination based on search costs. "Shoppers" have a zero and "nonshoppers" a positive search cost. A consumer faces a nondiscriminatory "common" price with some probability, or a discriminatory price. In equilibrium, firms mix over the common and the shoppers' discriminatory prices, but set a singleton nonshoppers' discriminatory price. Consumer welfare increases if price discrimination is restricted enough. An individual firm's profit can increase in the number of firms. These results have important implications for regulations that limit the tracking of consumers (e.g., EU's GDPR, California's CCPA) and for evaluating competition online.
"Competitive Search and the Social Value of Public Information" with Piotr Denderski [Working Paper] CEPR Discussion Paper No. DP16884
Abstract: In the presence of trading frictions and imperfect information about market conditions, the quality of the available information matters for optimal prices. Prices, in turn, matter for the likelihood of trading. We model this interdependency in a competitive search equilibrium with aggregate risk and study the social value of better public information. While perfect information is always optimal, marginal effects of information can be positive, negative or neutral for trade. Equilibria featuring inefficient price dispersion can arise if some sellers choose a price that implies not selling the good when the demand is low. The salient features of the matching function matter for how information affects the equilibrium. We also find that entry is in general inefficient.
Abstract: I analyse a model of partially directed search where searchers decide which firm to visit based on correct, but incomplete, information about firms' prices. Firms' pure strategies are allowed to be price distributions and in the unique symmetric pure-strategy equilibrium the price distributions are nondegenerate. The model's results rationalise empirical observations on promotions and changes in consumer prices: the lowest offered prices are unprfiotable, the pdf of the price distribution is increasing, and the lowest prices are decreasing in the number of firms and the search cost.
Publications
"Informational Cycles in Search Markets" (2020): AEJ Micro, 12, 170-192. [WP version] [Online appendix]
I study a sequential search model where buyers face an unknown distribution offers and learn about the distribution from other buyers' actions. Each buyer observes whether a randomly chosen buyer traded in the previous period. I show that a cyclical equilibrium exists where the informational content of observing a trade fluctuates: a trade is good news about the distribution in every other period and bad news in the remaining periods. This leads to fluctuations in the volume and probability of trading. They fluctuate more if the unknown distribution is bad rather than good. A steady-state equilibrium where buyers are more likely to continue searching than in the cyclical equilibrium is less efficient than the cyclical equilibrium. A market that starts at date one converges to the cyclical equilibrium for some parameter values.
I study stationary cutoff-strategy equilibria of a dynamic market model where buyers sample sellers sequentially from an unknown distribution. Buyers learn about the distribution from the sampled sellers and a "trade signal''. The trade signal reveals whether a randomly chosen seller traded yesterday. Observing a trade (as opposed to no trade) is good news about the distribution. Buyers who observe a trade use a higher cutoff than buyers who observe no trade, despite buyers' learning from sampled sellers that puts a countervailing pressure on the cutoffs. The trade signal may reduce market efficiency, while an appropriate exogenous signal increases efficiency.
"A Two-Agent Model of Sequential Search and Choice'' (2016): Journal of Economic Behavior & Organization, 123, 122–137. [WP version]
This paper extends the standard sequential search model by allowing the agent who compiles the choice set via search (the "searcher") to differ from the agent who chooses from the set (the "chooser"). I show for a general joint distribution of the agents' preferences that the searcher’s optimal policy is a threshold rule. In contrast to the standard model, the threshold is weakly decreasing in time (i.e., exhibits the "discouragement effect"), although the search horizon is infinite and the search environment stationary. I characterise the threshold and discuss the testable implications of the discouragement effect. The characteristics of my model differ from two single-agent search models that feature a time-varying threshold (convex search costs or deadline). In particular, my model features a threshold that decreases endogenously over time and never generates return to an item rejected earlier, in contrast to the other models.