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 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 characterize conditions under which the agent receives positive rent, and provide sufficient conditions for moral hazard to delay investment. We apply our results 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