Hi and welcome to my website!
I am an Associate Professor at the Oslo Business School, OsloMet.
In my research I use microeconomic theory to study the way information is generated and shared in markets.
I co-organize the Nordic Economic Theory Group. You can find information about the group here.
Email: jacopo.bizzotto[at]oslomet.no
Credible Scores, [link to ArXiv] with Nathan Hancart
We study cheap talk with simple language, where the sender communicates using a score that aggregates a multidimensional state. Both the sender and the receiver share the same payoffs, given by a quadratic loss function. We show that the restriction to scores introduces strategic considerations. First, equilibrium payoffs can be strictly lower than those achievable under commitment to a scoring rule. Second, we prove that any equilibrium score must be either linear or discrete. Finally, assuming normally distributed states, we fully characterize the set of equilibrium linear scores, which includes both the ex-ante best and the worst linear scores.
Design and Sale of Market Segments, [link to SSRN] with Jesper Rüdiger and Stefan Terstiege
A platform segments a market and runs auctions in which firms bid for the access to market segments. Segmenting the market more finely allows firms to extract more profits from consumers but can decrease competition in the auctions. We first characterize extremal markets: markets that cannot be segmented further without reducing auction revenue. Second, we employ this result to characterize optimal segmentations in a Hotelling environment. Our results give an insight into the welfare losses and consumer surpluses resulting from for-profit market segmentation.
Biased Forecasts and Voting, [link to latest version] with Davide Cipullo and André Reslow
We introduce macroeconomic forecasters as political agents who may bias reports to influence voters. In a probabilistic voting framework, a voter forms expectations based on a forecaster’s reports. A partisan forecaster faces a trade-off between protecting its reputation and influencing the vote. The model predicts that the forecaster may lie before and after the vote. We test the model's predictions using high-frequency, forecaster-level data around the Brexit referendum. We find that forecasters exposed to financial losses from Brexit issued significantly more inaccurate GDP growth forecasts than others. The findings suggest that influential forecasters may strategically manipulate information when stakes are high.
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.
The Limits of Limited Commitment, [link to arXiv] with Toomas Hinnosaar and Adrien Vigier, AEJ:Microeconomics, forthcoming
We study limited strategic leadership. A collection of subsets covering the leader's action space determines 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. Under general commitment structures the leader may obtain a payoff that is less than her lowest Cournot payoff. We apply our results to a textbook duopoly model and characterize the commitment structures leading to consumer- and producer-optimal outcomes.
Accurate Audits and Honest Audits, with Alessandro De Chiara, Journal of Law, Economics & Organization, 2025
A regulator hires an auditor and designs the audit to be performed on 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.
Sorting and Grading, with Adrien Vigier, Journal of the European Economic Association, 2025
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.