Christoph Schlom

I'm an assistant professor of economics at UC Davis. I'm interested in economic theory -- particularly, mechanism design, regulation, game theory and market design. My email is cschlom at ucdavis dot edu.

Working papers

Providing Certainty (with Andy Choi and Chengyang Zhu)

We introduce a moral hazard model in which public information about a payoff-relevant state arrives over time, an agent decides when to make an irreversible investment, and a principal commits to a state-contingent policy to incentivize investment. To discourage the agent from waiting for more information, the principal's optimal policy \textit{provides certainty}, reducing the degree to which the agent's payoff depends on the state. This is inefficient -- both players would be better off with less certainty. We study when the agent receives positive rent, and when moral hazard delays investment. Our results apply to environmental subsidies and R&D incentives.

The Cost of Simple Pricing

I derive novel upper bounds on the revenue loss from mechanism simplicity in two related economic selling problems. First, in the Bulow and Roberts (1989) capacity-constrained selling problem, I derive a tight upper bound on the revenue ratio between the optimal mechanism and the optimal posted-price mechanism. This bound has value 2-c, where c is the seller's capacity. Second, I extend this result to give an upper bound on the revenue ratio between the optimal auction and the optimal posted-price mechanism in the (symmetric, potentially irregular) Myersonian multi-item auction. This bound is tight in the large auction limit, where it has limiting value 2-m/n, for an m-item, n-bidder auction. My derivations make novel use of a concavification procedure; the technique appears portable to other approximation questions in economic theory.

Price Distribution Regulation

I propose Price Distribution Regulation (PDR), an optimal price-based regulatory framework for differentiated product (Mussa-Rosen) monopolists. In PDR, a regulator sets a target probability distribution for transacted prices, which the monopolist's mechanism must meet. Since PDR only depends on price data, it is useful when product quality is difficult to directly regulate. I show that, while PDR is sufficient to fully restore allocative efficiency, a regulator with type-weighted utilitarian preferences will optimally distort qualities. Specifically, (1) a higher regulatory preference for consumer surplus to government revenue will lead the regulator to distort qualities upwards, whereas (2) a higher regulatory preference for low-type to high-type consumer surplus will reverse (1), harming all consumer types and increasing government revenue. Additionally, I show that PDR provides a novel incentive for monopolists to use mechanisms featuring price randomization, and characterize the regulations under which such randomization will occur.

Regulating Platform Procurement and Self-Production 

Persuasion via All-or-Nothing Mechanisms

Sharpening Winkler's Extreme Point Theorem: Economic Applications