Persuasion of a Privately Informed Receiver, with Anton KolotilinAndriy Zapechelnyuk, and Ming Li, revise and resubmit at Econometrica 

We study Bayesian persuasion in linear environments with a privately informed receiver. We allow the sender to condition information provided to the receiver on the receiver’s report about his type (private persuasion). We describe implementable outcomes, establish equivalence between public persuasion studied in the prior literature and private persuasion, and draw connections with the standard linear mechanism design with transfers. We also characterize optimal persuasion rules, establish monotone comparative statics, and consider several applications, such as a competitive market for a good with consumption externalities (e.g., cigarettes) in which a benevolent government designs an educational cam- paign about a payoff-relevant characteristic (e.g., the health risks of smoking). 

Will the truth out?--An advisor's quest to appear competent, with Nicolas Klein, revise and resubmit at Journal of Mathematical Economics

We study a dynamic career-concerns environment with an agent who has incentives to appear competent. It is well known that dynamic career concerns create incentives for an agent to be conservative and to tailor his actions and reports towards a commonly held prior opinion. The existing models, however, have focused on short time horizons. We show that for long time horizons there exist countervailing incentives for the agent to report his true opinion and to act in the principal’s best interests. In particular, if the time horizon is sufficiently long, the agent is sufficiently patient, and the quality of the competent expert is high, the beneficial long-term incentives overwhelm any harmful myopic ones, and the incentive problem vanishes.

Optimal allocation with ex-post verification and limited penalties, with Andriy Zapechelnyuk, American Economic Review, forthcoming

Several agents with privately known social values compete for a prize. The prize is allocated based on the claims of the agents, and the winner is subject to a limited penalty if he makes a false claim. If the number of agents is large, the optimal mechanism places all agents above a threshold onto a shortlist along with a fraction of agents below the threshold, and then allocates the prize to a random agent on the shortlist. When the number of agents is small, the optimal mechanism allocates the prize to the agent who makes the highest claim, but restricts the range of claims above and below.

Informed Principal Problem with Moral Hazard, Risk Neutrality, and No Limited Liability, with Christoph Wagner and Thomas Troeger, Journal of Economic Theory, 159(A), 2015, 280-289

We consider a principal agent moral hazard problem with risk-neutral parties and no limited liability in which the principal has private information. The principal’s private information creates signaling considerations that may distort the implemented outcome. These distortions can explain, e.g., efficiency wages (Beaudry 1994) and muted incentives (Inderst 2001). We show that in a large class of environments these distortions vanish if the principal is allowed to offer sufficiently rich contracts.

Mechanism design by an informed principal: the quasi-linear private-values case, with Thomas Troeger, Review of Economic Studies, 81(4), 2014, 1668-1707

We provide a solution to the informed-principal problem in the independent-private-values setting with monetary transfers. The principal’s private information creates signaling considerations that may distort the implemented allocation. We show that there is no distortion: all principal types implement an allocation that is optimal for the principal ex ante, before she learns her type. As an application, we consider settings with linear utility. For bilateral exchange (Myerson and Satterthwaite, 1983) in which the principal is one of the traders, the solution is a combination of a participation fee, a buyout option for the principal, and a resale stage with posted prices.

Optimal arbitration, with Andriy ZapechelnyukInternational Economic Review54(3), 2013, 769-785

We study common arbitration rules for disputes of two privately informed parties, final offer and conventional arbitration. Final offer arbitration is shown to be an optimal arbitration rule in environments without transferable utility, while conventional arbitration is optimal if utility is transferable. These results explain prevalence of both arbitration rules in practice.

Decision rules revealing commonly known events, with Andriy ZapechelnyukEconomics Letters, 119(1), 2013, 8-10

We provide a sufficient condition under which an uniformed principal can infer any information that is common knowledge among two experts, regardless of the structure of the parties’ beliefs. The condition requires that the bias of each expert is less than the radius of the smallest ball containing the action space. If the principal does not know the structure of the experts’ biases and is concerned with the worst-case scenario, this condition is also necessary.

Informed principal problems in generalized private values environments, with Thomas Troeger, Theoretical Economics, 7(3), 2012, 465-88

This paper provides a solution for the problem of mechanism selection by a privately informed principal in generalized-private-value environments. The idea is to extend the solution proposed in Maskin and Tirole (1990). Nevertheless, a direct extension runs into existence problem. The paper find the right weakening of the approach in Maskin and Tirole that ensures existence in general private values environments. 

Diverging Opinions, with James Andreoni, American Economic Journal: Microeconomics, 4(1), 2012, 209-32

People often see the same evidence but draw opposite conclusions, becoming increasingly polarized over time. More surprisingly, such disagreements persist even when they are commonly known. In this paper, we derive a simple model and present an experiment showing that opinion polarization can emerge trivially when one-dimensional opinions are formed from two-dimensional information. Contrary to the theoretical prediction, however, when subjects are given sufficient information to reach agreement, disagreement persists. Our analysis shows that people discount information when it is filtered through the actions of others, but not when it is presented directly, indicating that common knowledge of disagreement may be possible because people are overly skeptical of the decision-making skills of others.

Stochastic Mechanisms in Settings without Monetary Transfers, with Eugen Kovac, Journal of Economic Theory, 144(4), 2009, 1373-1395

Although this paper is framed as a study of relative performance of stochastic and deterministic mechanisms, it really provides a characterization of optimal delegation mechanisms without any restriction on the set of feasible contracts. A cute technical part of the paper is that it finds a way to modify and apply techniques used for characterizing optimal auctions. The cost - an assumption on the payoff functions. 

Optimal auction with resale - a characterization of the conditions, with Thomas Troeger, Economic Theory, 40(3), 2009, 509-528

This paper is a note on the work by Zheng (2002) who has shown that resale imposes no loss on the auctioneer in Myerson optimal auction environment. Zheng's construction requires some assumptions on the underlying distributions of agents' valuations. This note characterizes the meaning of those conditions. 

Veto-based delegation, Journal of Economic Theory, 138(1), 2008, 297-307

This paper shows that in a delegation environment, the principal can implement an optimal outcome through veto-based delegation with a properly chosen default decision. This result demonstrates the exact nature of commitment powers required by the principal: to design the default outcome and to ensure that she has almost no formal control over the agent’s decisions.

Task scheduling and moral hazard, with Patrick Schmitz, Economic Theory, 37(2), 2008, 307-320

We study a two-period moral hazard problem with risk-neutral and wealth-constrained agents and three identical tasks. We show that the allocation of tasks over time is im- portant if there is a capacity constraint on the number of tasks that can be performed in one period. We characterize the optimal schedule of tasks over time and the optimal assignment of tasks to agents conditional on the outcomes of previous tasks. In particular, we show that delaying tasks is optimal if and only if the effect of an agent’s effort on the probability of success is relatively low.