Working papers and research in progress
If you're interested in a paper, you can always request the latest working paper version by sending an e-mail to p.heijnen@rug.nl.
Absent-minded Consumer Search and Online Advertising (2025)
Joint with Marco Haan (University of Groningen)
Abstract: We consider a model of sequential consumer search with differentiated products, where we allow for the possibility that consumers may be absent-minded: along their search journey, consumers may forget the firms and products that they have observed. We also allow for firms to remind potentially absent-minded consumers of their product through advertising, a practice known in the marketing literature as retargeting. We consider two scenarios: one in which consumers are naive concerning their potential absentmindedness, and one in which they are sophisticated about that possibility. We show that retargeting lowers equilibrium prices. Higher prices drive more consumers away, making it harder to target those who leave due to absentmindedness.
Search-Inducing Informative Advertising (2024)
Joint with Marco Haan (University of Groningen) and Jellien Knol (SEO)
Abstract: We study consumer search with informative advertising. In a duopoly with differentiated products, consumers are initially unaware of both the existence and the benefits of the products. A consumer that sees the ad of one brand will first explore that brand, but may then decide to search for an alternative. We find that if search costs are high, advertising mainly involves business stealing and firms overadvertise. If search costs are low advertising mainly involves market expansion and firms underadvertise as so firms tend to free ride. With more firms, our main results still hold.
Does adaptation increase emissions? The effect of independent adaptation policies on international environmental agreements (2024)
Joint with Wim-Paul Hiddink (University of Groningen)
Abstract: In a two-stage adaptation-mitigation game, we investigate how cooperation on emission reductions (e.g. limiting carbon emissions) affects the decision to reduce the impact of emissions (e.g. adapting to climate change). We find that beliefs about future emissions levels are reinforcing. When countries cooperate, this implies that low emission (and adaptation) equilibria co-exist with high emission equilibria, where the latter maximize aggregate welfare. This suggests that adaptation drastically reduces the benefits of cooperation. Countries with high adaptation cost may not be able to fully offset the higher emission cost: this group would still prefer to limit emissions.
Environmental quality provision by a multi-product monopolist (2021)
Abstract: This paper investigates the incentives of a multi-product monopolist to offer a range of products of differing environmental quality when consumers care about the average quality on offer. The profit-maximizing menu of products underprovides quality. While this is a general result from the screening literature, the externality exacerbates it and a simple subsidy is not sufficient to achieve the optimal level of quality. As a potential remedy, several forms of belief manipulation are investigated, i.e.\ the situation where either the monopolist increases the consumers' perception of average quality or where an adversary, like an environmental interest group, increases the prominence of the low-quality product. Whether this increases average quality depends on the specification of the utility function. Precise conditions under which average quality increases are formulated.
A Theory of Cherry Picking (2020)
Joint with Allard van der Made (ACM)
Abstract: We investigate the endogenous acquisition of information in sender-receiver games when information is verifiable. In our setting, there is uncertainty about whether the sender and the receiver will experience a loss. The sender can acquire information about the probability that a loss will occur, while the receiver can reduce the loss. Both actions are costly. By dispersing her information, the sender can change the receiver's perception about the likelihood of loss and (potentially) persuade him to reduce the loss by more than he would have done in the absence of this information. We show that there is a unique perfect Bayesian Nash equilibrium where the sender acquires information but only shares information that indicates that the loss is likely to happen. The receiver takes into account this biased source of information and exerts effort to reduce the loss accordingly. Compared to the social optimum, when the loss is sufficiently high vis-\`a-vis the cost of acquiring information, the amount of information acquired (and dispersed) is too low.
On the Computation of Equilibrium in Discontinuous Economic Games (2020)
Abstract: In many (game-theoretic) models of price competition, mixed-strategy Nash-equilibria naturally occur. For firms, it is an equilibrium to randomly draw a price from a non-degenerate distribution whose support is an interval on the real line. Computing this distribution is a nontrivial task except in special cases. This paper proposes a procedure to numerically calculate such an equilibrium. Examples illustrate that the procedure is fast and accurate.