Sequential Search with Flexible Information (with Pavel Ilinov, Salil Sharma, Elias Tsakas and Mark Voorneveld)
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We consider a model of sequential search in which an agent (the employer) has to choose one alternative (a candidate) from a finite set. A key feature of our model is that the employer is not restricted to specific forms of information acquisition, i.e., she is free to endogenously choose any interview for each candidate that arrives. Our main characterization result shows that the employer's unique optimal strategy is to offer a gradually easier interview to later candidates. Remarkably, even if the number of candidates grows arbitrarily large, the probability of hiring a good candidate is bounded away from 1. Then, we show that only in some extreme pathological cases the candidates are treated equally in terms of the total probability of being hired; in fact, in most settings of applied interest, the first candidate seems to be favored. Finally, if we characterize a wide range of cases where the employer prefers to start by interviewing ex ante worse candidates.
Optimally Biased Expertise (with Pavel Ilinov, Maxim Senkov and Egor Starkov): R&R in The Economic Journal
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This paper shows that the principal can strictly benefit from delegating a decision to an agent whose opinion differs from that of the principal. We consider a "delegated expertise" problem, in which the agent has an advantage in information acquisition relative to the principal, as opposed to having preexisting private information. When the principal is ex ante predisposed towards some action, it is optimal for her to hire an agent who is predisposed towards the same action, but to a smaller extent, since such an agent would acquire more information, which outweighs the bias stemming from misalignment. We show that belief misalignment between an agent and a principal is a viable instrument in delegation, performing on par with contracting and communication in a class of problems.
Approval vs. Participation Quorums (with Dmitriy Vorobyev and Azamat Valei): R&R in European Journal of Political Economy
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Using a pivotal costly voting model of elections between a status quo and a challenger alternative, we compare participation and approval quorum requirements in terms of how they shape voter incentives to cast votes, and how they ultimately impact voter turnout, election outcomes, and welfare. We first show that approval and participation quorum restrictions of equal strictness result in at most two types of stable non-trivial equilibria: “abstention,” in which status quo supporters strategically abstain from voting, and “coordination,” in which they vote with positive probability. While abstention equilibria are always identical in the two quorum settings, coordination equilibria may differ, but only when the cost of voting is sufficiently low and status quo support among voters is neither extremely high or low, nor is it close to the degree of support for the challenger. We show that, in those cases, the difference in the outcomes of interest between approval and participation quorum settings is quantitatively small. The main difference between the two settings therefore arises from the fact that, under an approval quorum, coordination equilibrium exists for a narrower range of status quo support levels than under a participation quorum. We discuss the implications of these findings for designing optimal quorum restrictions, suggesting that choosing an approval quorum over a participation quorum and setting its strictness close to half of the number of voters, or setting no quorum restrictions at all, are often welfare maximizing choices.