Research
Published Articles
with Saori Chiba
Games and Economic Behavior, 2022, Vol.134, pp. 229-241.
We investigate a cheap talk model in which a decision maker and an expert are both privately informed. Both players observe independent signals that jointly determine ideal actions for the players, and the decision maker can send a cheap talk message to the expert, which is followed by the cheap talk of the expert and then the action of the decision maker. In equilibrium, the strategy of the decision maker is not monotonic, and the revelation of the decision maker concerning her information does not necessarily result in welfare improvement of the players. In particular, in models in which optimal actions are additively and/or multiplicatively separable in the information of two players and their preferences are represented by quadratic loss functions, the information revelation of the decision maker cannot facilitate information transmitted from the expert.
Keywords: Cheap talk, Two-sided asymmetric information, Two-way communication.
Journal of Economic Literature Classification Numbers: D82, D83.
with Taiji Furusawa and Ian Wooton
International Tax and Public Finance, 2015, Vol. 22, Is. 3, pp. 452-475.
We examine how the bidding environment may affect the outcome of tax competition between two countries (or two regions) in attracting a firm’s foreign direct investment (FDI). We compare the equilibrium location choice and payoffs from an English auction, with both complete and incomplete information, relative to those in the traditional setting of a sealed-bid first-price auction. We find that an English auction leads to more aggressive bidding in “race beyond the bottom,” where the nations may bid beyond their own valuations of the FDI. We also discuss the roles of auction protocol and information asymmetry on the auction outcome.
Keywords: Tax competition, Foreign direct investment, International ownership, English auction, Information asymmetry.
Journal of Economic Literature Classification Numbers: F120, F230, H250, H730.
Journal of Economic Behavior & Organization, 2008, Vol. 68, Is. 3-4, pp. 626-631.
In many cases, the cost of an agent acquiring information is lower than that for the principal. However, because of a private benefit difference between the principal's and agent's preferences, the principal often cannot fully utilize the agent's advantage. This paper considers the cost of motivating the agent to acquire information and inducing him/her to report it truthfully. As usual, the larger the private benefit, the larger the cost of eliciting true information. At the same time, the private benefit may reduce the cost of motivating information acquisition. Thus, there are cases in which an agent with a different preference is desirable.
Journal of Economic Literature Classification Numbers: C72, D23, D82, D86.
Contributions to Theoretical Economics, 2006, Vol. 6, Iss. 1, Article 4.
A bilateral trading model with investment is considered. In a "cooperative" investment version of the model, the seller's investment stochastically determines the buyer's valuation of the good. The value and cost of the good are realized only after the investment is made, and the investment level and the realization of the good's value and cost are private information. I show that, under these assumptions, no contract made before the investment can simultaneously induce efficient investment and efficient ex post trade when the buyer's type is continuously distributed. This inefficiency result contrasts sharply with the efficiency result under the standard "selfish" investment model, where the seller's investment stochastically determines the seller's cost.
Journal of Economic Literature Classification Numbers: C72, D23, D82, D86.