Andres Gonzalez Lira
I am a fifth-year Ph.D. student at UC Berkeley. My research primarily focuses on understanding how institutions shape organizations and agents' incentives in public-private procurement and regulation enforcement.
Fields: Industrial Organization, Organizational Economics and Applied Microeconomics.
Abstract: Attempts to curb illegal activity through regulation gets complicated when agents can adapt to circumvent enforcement. Economic theory suggests that conducting audits on a predictable schedule, and at high frequency, can undermine the effectiveness of audits. We conduct a large-scale randomized controlled trial to test these ideas by auditing Chilean vendors selling illegal fish. Vendors circumvent penalties through hidden sales and other means, which we track using mystery shoppers. Instituting monitoring visits on an unpredictable schedule is more effective at reducing illegal sales. High frequency monitoring to prevent displacement across weekdays to other markets backfires, because targeted agents learn faster and cheat more effectively. Sophisticated policy design is therefore crucial for determining the sustained, longer-term effects of enforcement. A simpler demand-side information campaign generates two-thirds of the gains compared to the most effective monitoring scheme, it is easier for the government to implement, and is almost as cost-effective. The government subsequently chose to scale up that simpler strategy.
Work in Progress
- Publicity and Competition in Federal Procurement (with Rodrigo Carril and Michael Walker)
Abstract: We study the effects of intensifying competition for public procurement contracts through advertising. Publicizing contract opportunities promotes bidder participation, potentially leading to price reductions. Yet extensive advertising could exacerbate adverse selection of bidders on non-contractible quality dimensions. We study this trade-off in the context of procurement contracts for the U.S. Department of Defense. We use a Regression Discontinuity Design, leveraging a regulation that mandates agencies to publicize contract opportunities that are expected to exceed a certain threshold. Our results show that advertised contracts receive considerably more bids and are more likely to be awarded to geographically distant vendors, who have less prior history with the office. However, we find that the post-award performance of publicized contracts worsens, resulting in more cost overruns and delays. The latter effect is driven by goods and services that are relatively more complex, highlighting the role of contract incompleteness. We complement our reduced form results with a model to recover public buyers' preference parameters over price and quality. This model is used to further study the extent to which advertising interacts with adverse selection.
- The Effect of Discretion over Auction Duration in Public Procurement