Published Articles
Martinez-Carrasco, Miguel A., Eric Schmidbauer and John Hamman (2025). ``Project selection with biased advice: an experiment on competitive cheap talk,'' Journal of Economic Behavior & Organization, Vol 232, 106936. Presentation slides.
Yang, Jianxia, Eric Schmidbauer and Lan Zhang (2023). ``Partial Cross Ownership, Exclusive Contracting, and Market Entry,'' Economics Letters, 226, 111048.
Arnold, Michael, Eric Schmidbauer and Lan Zhang (2022). "Uniform and targeted informative advertising with asymmetric customer loyalty," Journal of Economics & Management Strategy, 31(1), 90-114.
Ashoori, Minoo, Eric Schmidbauer, and Axel Stock (2020). "Availability as a Signal for Quality in a Market with Word-of-Mouth Communication," Review of Marketing Science, 18(1), 99-115.
Lubensky, Dmitry and Eric Schmidbauer (2020). "Free Product Trials: Disclosing Quality and Match Value," Economic Inquiry, 58(4), 1565-1576. Presentation slides.
Schmidbauer, Eric (2019). "Budget Selection when Agents Compete," Journal of Economic Behavior & Organization, 158: 255-68. Presentation slides.
Schmidbauer, Eric and Axel Stock (2018). "Quality Signaling via Strikethrough Prices," International Journal of Research in Marketing, 35(3), 524-532.
Lubensky, Dmity and Eric Schmidbauer (2018). "Equilibrium Informativeness in Veto Games," Games and Economic Behavior, 109, 104-125. Older working paper version with treatment of the full parameter range (referenced in footnote 8). Presentation slides.
Schmidbauer, Eric and Dmitry Lubensky (2018). "New and Improved?", International Journal of Industrial Organization, 56C, 26-48. Presentation slides.
Schmidbauer, Eric (2017). "Multi-period competitive cheap talk with highly biased experts," Games and Economic Behavior, 102, 240-254. Presentation slides.
Working Papers
"List prices and 'hot' real estate markets" (with Dmitry Lubensky).
In this paper, we develop a novel micro-foundation for the dynamics of "hot" real estate markets, where list prices play a critical role. Our model introduces the concept of partial seller commitment, where sellers are obligated to accept offers at or above the list price but retain discretion to reject lower bids. This framework generates a discontinuity in the bidding function, as buyers either bid significantly above the list price or much lower, avoiding offers just below the list price. We show that this behavior results in higher list prices, increased sales prices, and a higher sales-to-list price ratio as the number of buyers increases—key indicators of a hot market. Unlike traditional models, our approach allows for sales prices to be at, above, or below the list price, providing a more realistic and flexible explanation of market outcomes. Our findings offer new insights into the strategic setting of list prices and contribute to a deeper understanding of auction dynamics in real estate markets.
"Uncertainty and Experimental Pricing: When Fixed Costs Matter'' (with Lan Zhang). Presentation slides.
We analyze experimental pricing with fixed costs in a two-period Bayesian learning model. A monopolist prices its product while learning about its marginal cost through first-period sales, as in insurance markets with uncertain loss probabilities or firms adopting new production processes. When consumer willingness to pay is independent of the cost uncertainty, the firm's second-period profit is convex in the loss rate, making learning valuable and leading to lower first-period prices. Conversely, when willingness to pay depends on cost uncertainty, learning can reduce firm profit, incentivizing higher first-period prices to limit sales and thus consumer updating. In both cases, fixed costs matter through the option to exit, which links first-period sales to the continuation value. The resulting comparative statics are nonmonotonic: higher fixed costs can either strengthen or weaken incentives to experiment. Our findings provide a rational foundation for observed deviations from marginal-cost pricing in industries where learning and fixed costs are important.
Works in Progress
"The use of buyer 'love letters' in residential real estate markets".
"The 15% pledge: Does it help minority owned suppliers?" (with Axel Stock).
"When should firms promote learning? An experimental study" (with Brock Stoddard and Lan Zhang).
Painfully condensed summary of each of my published papers
Project selection with biased advice...: experimentally, biased experts misrepresent more when competition is high but are more truthful when low-quality projects are common or provide little benefit.
Partial Cross Ownership, Exclusive Contracting, and Market Entry: offering partial cross ownership to an incumbent can thwart its ability to exclude an entrant through exclusive contracting.
Uniform and targeted informative advertising...: pricing and advertising strategies interact in interesting ways with the size of different market segments.
Availability as a Signal for Quality...: word-of-mouth effects and consumers' desire for exclusive consumption experiences affect the firm's optimal signaling strategy.
Free product trials: free trials cause more favorable beliefs about quality but give consumers private information about their match value, so sometimes firms won't allow them.
Budget selection when agents compete: A "bloated" budget can be rational because it reduces competition between selfish experts thereby inducing more truth-telling.
Quality signaling via strikethrough prices: A low price now is bad news about quality unless the firm can prove it was able to charge a high price before.
Equilibrium informativeness in veto games: When an expert gives take-it-or-leave-it advice that also restricts your choices, lots of things can happen but you’re probably better off than if your choices were unrestricted.
New and improved: Because it’s expensive to make and sell new products, if the firm bothered to release them they usually are improved over their predecessors.
Multi-period competitive cheap talk: When selfish experts compete and are forward looking they won’t act completely selfish.