Sergei Kovbasyuk

Assistant Professor, Einaudi Institute for Economics and Finance

PhD, Toulouse School of Economics


Curriculum Vitae

Research Interests

Economics of Information, Finance,  Economics of Organization, Contract Theory.    

Working Papers 

Seller-paid Ratings (submitted)


We study the interaction between the seller of a product, the buyers who are uncertain about the product quality and a rating agency who observes the quality and sends signals about it. Assuming the seller-pays model of rating agency, we analyze the cases in which the payment to the rater is publicly disclosed and fixed, publicly disclosed and rating-contingent, private and rating-contingent. First, we characterize all possible equilibrium partitions of the underlying quality range into ratings in these three cases. Under a fixed payment, the ratings are cheap talk and convey no information in equilibrium. When the payment is public and rating-contingent, perfectly revealing ratings are feasible. Under a private rating-contingent payment, only partitions with coarse ratings are feasible. We then characterize the seller's optimal ratings in the three cases. Under a public rating-contingent payment the seller prefers perfectly revealing ratings with positive payments above some quality threshold, and a single coarse rating with zero payments below the threshold (rejections). Under a fixed payment and under a private rating-contingent payment the seller prefers uninformative rating. Finally, we perform welfare analysis and discuss regulation. A desirable regulation of payments requires public disclosure and allows contingent payments.

Intertemporal competition for institutional capital in IPOs


We propose a model of intertemporal competition for institutional capital in initial public offerings (IPOs) of equity. A firm issuing shares at t courts institutional investors that also consider investing in a subsequent IPO at t+1. We characterize stationary equilibria in two regimes: 1) when all issuers use bookbuilding, 2) when all issuers use fixed price offer. Issuers compete for institutional capital and in equilibrium pay rent to institutional investors: the shares are underpriced on average and institutional orders are treated favorably. Bookbuilding is more flexible than fixed price offer and permits the issuer to pay a higher rent to institutional investors. Individually each issuer weakly prefers bookbuilding. Yet, bookbuilding intensifies intertemporal competition among the issuers for institutional capital. When institutional resources are limited the issuers would jointly benefit if bookbuilding would not be allowed. Our theory accords with several empirical findings that are hard to reconcile with the standard asymmetric information theory of IPOs. 

Advertising Arbitrage joint with Marco Pagano


Speculators often advertise arbitrage opportunities in which they invest. We propose a model where such behavior arises as the arbitrageur's response to the risk of premature liquidation of his arbitrage position. Insofar as by advertising he manages to persuade investors, he accelerates the correction of mispricing and thus reduces the cost of early liquidation. Hence, the arbitrageur will choose his portfolio jointly with his allocation of advertising effort among assets. A risk-averse arbitrageur who observes mispricing of several assets chooses to take positions in at most two assets, one that he uses to hedge against the liquidity shock by advertising, and possibly another asset with high long-term expected return that he does not advertise. A risk-neutral arbitrageur generally takes position in a single asset and advertises it. When there are multiple arbitrageurs, externalities in advertising can induce them to pick and advertise the same asset, even when this is inefficient.