Research

I study how relational contracts manage uncertainty through information design in a frictional matching market. A principal and an agent form a match of unknown quality, and the principal chooses how much evidence to acquire before deciding whether to continue the relationship and pay an informal bonus. More precise learning improves separation from poor matches but can weaken the credibility of future rewards for retained agents. The optimal information policy is binary, and above a belief cutoff the principal remains strategically ignorant even when information is free. Market thickness determines how much learning the relationship can sustain. Scarce principals induce full revelation, abundant principals shut learning down, and intermediate markets generate partial learning. The decentralized economy can therefore over- or under-learn relative to a constrained planner.

Managers often report that labor constraints, defined as the inability to find workers, are a major obstacle to firm growth. In this paper, we analyze why firms report these constraints rather than preempt them by increasing wages. Using German vacancy and establishment data, we document that labor constraints reflect real recruiting difficulties and are related to firms’ growth and profitability. Consistent with basic monopsony models, firms that report labor constraints pay lower wages, and a quasi-exogenous increase in wages alleviates the constraints. However, because standard frictions alone cannot match wage dynamics at constrained firms, we build a dynamic matching model with incomplete information about the state of the economy and downward wage rigidity. Consistent with the model, hiring difficulties are most prevalent for peripheral occupations, arise in markets where wages are harder to track — whether due to high wage dispersion or wage shocks in other sectors — and are more likely at firms with high wage rigidity. The evidence is consistent with a key role for firms’ inaccurate beliefs and gradual learning about workers’ outside options in different states of the economy.

When organizations merge or assemble workers from different backgrounds, they often invest in cultural integration to reduce disagreement. I study when such integration improves organizational performance in a model where workers value both accuracy on an uncertain task and coordination with one another. I distinguish two forms of integration that have opposite welfare effects. Belief-based integration makes groups’ initial views more similar, while information-based integration gives workers better task-relevant signals. Belief-based integration operates through higher-order beliefs, i.e. what each worker expects others to think and do. It can reduce visible disagreement but lower welfare when those views are uninformative, because coordination makes workers rely on them more heavily. Better information instead shifts behavior toward evidence and usually raises welfare. These results imply that organizational cohesion can be a poor proxy for decision quality, especially when coordination motives are strong.

Does foreign multinational expansion encourage or undermine domestic skill investment? Using South African administrative data, we show that foreign multinational growth intensifies competition for workers at large domestic firms. As more employees move to foreign employers, domestic firms slow hiring and pull back from training in portable general skills. Instead of responding with higher wages to retain workers, they shift away from investments in broadly transferable human capital. The results point to an overlooked tradeoff of globalization. Foreign investment can expand workers’ outside options while weakening domestic firms’ incentives to build skills.

Organizations use certified reports to gather credible information from agents. Certification controls what agents may claim, while report choice determines which true claims enter the record. When one report type can be certified in several states, an agent in a weak state can present the same evidence as a strong one and receive the strong state’s treatment. I model these masquerades as a directed graph over states, with θ pointing to θ′ when θ can profit from the treatment meant for θ′. Strongly connected components (SCCs) are the inevitable pooling blocks. States inside one component must be treated alike, and that partition can always be implemented. Full separation is possible when the graph has no cycles. The model also provides practical tools for testing feasible partitions and choosing report restrictions.

This paper studies how career incentives shape job search and early career choices among young workers in India. We focus on whether entry-level workers value promotion opportunities and future wage growth, and whether these preferences affect how they respond to job postings. Using a discrete choice experiment with young adults in India, we estimate willingness to pay for jobs that provide clearer paths to promotion and higher future earnings. Pilot results show that respondents are willing to give up current wages for advertised promotion opportunities, with valuations increasing when promotion probabilities are higher. Workers also value future wage growth, especially when it is linked to a salient promotion path. These findings suggest that career incentives are an important but under-measured job attribute in youth labor markets.