Working papers

Biased Forecasts and Voting: The Brexit Referendum Case, [DRAFT COMING SOON] with Davide Cipullo and Andre' Reslow, reject and resubmit at EJ

The Limits of Limited Commitment, [link to arXiv] with Toomas Hinnosaar and Adrien Vigier, review and resubmit at JET 

We study limited strategic leadership. A collection of subsets covering the leader's action space determine her commitment opportunities. We characterize the outcomes resulting from all possible commitment structures of this kind. If the commitment structure is an interval partition, then the leader's payoff is bounded by her Stackelberg and Cournot payoffs. However, under more general commitment structures the leader may obtain a payoff that is less than her minimum Cournot payoff. We apply our results to study information design problems in leader-follower games where a mediator communicates information about the leader's action to the follower.

Frequent Audits and Honest Audits, [link to PDF], with Alessandro De Chiara

A regulator hires an auditor to audit a firm. The anticipation of an accurate audit can induce a non-compliant firm to bribe the auditor. An inadequate salary from the regulator can induce the auditor to accept the bribe. Yet, we show that (i) as the budget available to the regulator increases, the optimal audit might become less accurate, and (ii) as the regulator gets access to complex contractual forms to deal with the auditor, the odds of collusion can increase. Key to these results is the observation that a regulator might induce the firm to invest more in compliance by tolerating collusion rather than by preventing it.

Communication via Third Parties, [link to SSRN], with Eduardo Perez-Richet and Adrien Vigier

A principal designs an information structure and chooses transfers to an agent that are contingent on the action of a receiver. The principal faces a trade-off between, on the one hand, designing an information structure maximizing non-monetary payoffs, and on the other hand, minimizing the information rent that must be conceded to the agent in order to implement the information structure which the principal designed. We examine how this trade-off shapes communication. Our model can be applied to study the relationship between, e.g.: political organizations and the public relations companies that campaign on their behalf, firms and the companies marketing their products, consultancies and the analysts they employ.

Publications

Sorting and Grading, [link to arXiv], with Adrien Vigier,  accepted at the  Journal of the European Economic Association 

We propose a framework to assess how to optimally sort and grade students of heterogenous ability. Potential employers face uncertainty regarding an individual's productive value. Knowing which school an individual went to is useful for two reasons: firstly, average student ability may differ across schools; secondly, different schools may use different grading rules and thus provide varying incentives to exert effort. An optimal school system exhibits coarse stratification with respect to ability, and more lenient grading at the top-tier schools than at the bottom-tier schools. Our paper contributes to the ongoing policy debate on tracking in secondary schools.

The Certifier for the Long Run, with Bård Harstad, International Journal of Industrial Organization, 2023

We build a workhorse model to study the optimal and the equilibrium certifier from a long-run perspective. Firms enter the market, and invest in their capacity to provide quality, before the certification threshold is determined. With a certifier that cares about quality and externalities (such as an NGO), the threshold is demanding and the firms’ profits are small. Anticipating this, only a few firms enter the market, and they invest heavily. With a certifier mostly concerned with the firms' profits (such as an industry association), the results are reversed. The relative importance of externalities, investments, and entry determines the socially optimal certifier identity as well as the type of certifier that is most likely to operate in equilibrium. The theory's predictions are empirically testable and shed light on the variety of certifiers across markets and over time.

Fees, Reputation and Information Production in the Credit Rating Industry, with Adrien Vigier, AEJ: Microeconomics, 2021

What is the best way to harness a credit rating agency's reputational concerns? We examine an agency's incentives to acquire costly information and assign ratings that reflect this information under different compensation schemes. We find that, relative to the case in which the agency is paid conditional on assigning a favorable rating, a policy requiring issuers to pay the agency irrespective of the ratings assigned may reduce the agency's incentives to acquire information and result in less informative ratings. However, if a regulator monitors information acquisition, then upfront fees always result in more informative ratings.

Dynamic Persuasion with Outside Information, with Jesper Rudiger and Adrien Vigier, AEJ: Microeconomics, 2021

We examine the dynamic interaction between an agent and a principal aiming to persuade the former to approve a proposal of uncertain value. We allow for inside as well as outside information. The former is generated by the principal, who in turn exerts no control over the latter. Pareto efficiency requires the agent never to wait for outside information. We fully characterize the conditions in which equilibrium outcomes are efficient and discuss two leading applications: drug reviews and scholarly peer review.

[Python code for equilibrium calculation] [old draft: How to Persuade a Long-Run Decision Maker] 

Testing, Disclosure and Approval, with Jesper Rudiger and Adrien Vigier, Journal of Economic Theory, 2020 

Certifiers often base their decisions on a mixture of information, some of which is voluntarily disclosed by applicants, and some of which they acquire by way of tests or otherwise. We study the interplay between the information acquisition of certifiers and the information disclosure of applicants. We show that the inability of a certifier to commit to the amount of information to be acquired can result in a reduction of information disclosed. Among other consequences, given the choice between two information acquisition technologies, the certifier may prefer to commit to the inferior technology, in the sense of being either more expensive or less accurate.

[old draft: Sep_2019_Version]

Can a Better Informed Listener be Easier to Persuade?, with Adrien Vigier, Economic Theory, 2020

We study the impact of exogenous news on the classic Bayesian persuasion problem. The sender supplies information over multiple periods, but is unable to commit at the onset to the information that she will supply in periods ahead. A tension then emerges between the sender and her future self. We show that by resolving this tension, more informative news can make the sender better off.

Electoral Competition with Strategic Disclosure, with Ben Solow, Games, 2019

Recent developments in information and communication technologies allow candidates for office to engage in sophisticated messaging strategies to influence voter choice. We consider how access to different technologies influence the choice of policy platforms by candidates. We find that when candidates can target messages to specific voter groups, platforms are more likely to be inefficient. In particular, when candidates can run targeted campaigns, they commit to projects that benefit small groups even when the social cost of these projects outweigh their benefits. Our results are robust to negative advertising.