U.S. Department of Justice
I am an economist with the US Department of Justice Antitrust Division, where I analyze analyze mergers and competition issues in a variety of industries. My research interests include auction and bargaining theory, price dispersion and forward contracting. Below are links to some recent papers. The views expressed therein are my own and do not necessarily reflect those of the US Department of Justice.
Search Costs and Equilibrium Price Dispersion in Auction Markets with Matthew Backus and Henry Schneider, European Economic Review, 74, 2014, 173-192.
Abstract: A leading explanation for price dispersion in posted-price markets is search costs. We incorporate this insight into a model of competing second-price auctions similar to eBay. By doing so, we extend the narrow literature on competing auctions to capture price dispersion, and grow the already large literature on price dispersion to include auctions. We provide evidence on search costs and price dispersion using data collected from eBay, identifying search costs by exploiting a discontinuity in the visibility of auctions due to eBay's search tool.Testing for Nonstandard Behavior in Auctions in the Presence of Unobserved Demand with Henry Schneider, Revise & resubmit, European Economic Review.
Abstract: Empirical work on auctions has found that bidders deviate from rational behavior under standard preferences in important ways. In the current paper, we investigate a range of these behaviors, including nonrational herding, auction fever, quasi-endowment effect, and escalation of commitment. Our innovations are to more completely control for unobserved demand by using new data from a field experiment on eBay, and by making necessary modifications to tests used in previous work. With these innovations, we now find no evidence that these behaviors are important in the field.
Sequential English Auctions under review.
Abstract: Cassady (1967) describes the tactic of "fishing" for an opening bid, whereby an auctioneer calls out lower and lower amounts until an opening bid is eventually placed. The current study incorporates this behavior into an auctioneer's strategy set by considering the sale of an indivisible good via English ascending-price auction when the auctioneer cannot commit to a predetermined sequence of starting prices in advance. A key insight of the paper, which departs from McAfee and Vincent (1997) in a study of the second-price auction analogue of this game, is that the well-known strategy equivalence between the English auction and the second-price auction fails to extend to the sequential setting. This difference has important implications for the optimal starting-price path, giving rise to a Coase conjecture on the initial starting price. The well known revenue equivalence of the two auction formats in static settings is shown to extend to the sequential setting. A bidding outcome resembling "auction fever" as described by Cassady (1967) is explained within the model and serves to further highlight the differences between the two auction formats.
Informational Shill Bidding working paper.
Abstract: A number of high-profile cases highlight the importance of shill bidding, the practice of a seller bidding on his own item, in selling fraudulent works of art through online auctions. In such cases, bidding by the seller serves to influence the perception of the item's authenticity by buyers who believe that competing buyers may have superior information. This paper rationalizes the observed behavior in a common-value ascending-price auction model. An equilibrium is established in which fraudulent sellers engage in shill bidding, yet these bids are informative to buyers. Necessary conditions for this equilibrium are that non-fraudulent sellers are uninformed of the item's true quality, so that signalling or other forms of information revelation are not possible; buyers are asymmetrically informed; and fraudulent sellers comprise a sufficiently small proportion of all sellers in the market. An interesting comparative static result shows that increasing the proportion of fraudulent sellers can actually increase total surplus as shill bids lose their power to deceive.