Selected Works

This study explores optimal project management strategies in environments where delays are frequent and unpredictable. In such settings, contractors can either hide delays through false reports or by postponing the disclosure of genuine setbacks. To address this, the project sponsor uses a soft deadline combined with an incentive structure that rewards early project completion, encouraging honest reporting and timely work. However, unexpected delays late in the project trigger a process where extensions are granted on an ad-hoc basis, with the possibility of inefficient cancellation if progress becomes untenable. As these extensions accumulate, the project’s schedule and budget can spiral out of control, potentially leading to cancellation even after significant investment. This research investigates the balance between inducing optimal performance, managing setbacks, and ensuring project success in the face of uncertainty.

This study examines the design of an optimal incentive scheme for managing a multistage project, where the agent (the project manager or contractor) has private knowledge of progress at each stage. The proposed contract involves a flexible "soft" deadline, where the principal (the project sponsor) guarantees funding up to a certain date. If the agent reports progress by that date, they are given a firm deadline to complete the project. However, if no progress is reported, the project enters a probationary phase, during which it may be randomly terminated until progress is eventually reported. The study also explores different variations of this model, offering insights into optimal project management strategies. Notably, the research shows that the principal can improve outcomes by imposing a small cost on the agent for submitting progress reports or by making the early stages of the project slightly more challenging than the later stages. These findings have implications for structuring contracts that balance flexibility with accountability, ultimately encouraging timely performance and honest reporting.

This 2016  survey article provides an overview of the diverse theoretical and empirical research on the economics of privacy, with a focus on the value and impact of protecting or sharing personal information. It examines how consumers understand and navigate the trade-offs between privacy and the sharing of their data. The paper traces the evolution of privacy issues in the context of rapid technological advancements, which have introduced increasingly complex questions. Three key themes emerge from the literature: First, it is challenging to develop a single, unified economic theory of privacy due to the varied contexts in which privacy concerns arise. Second, protecting privacy can both benefit and harm individual and societal well-being, depending on the situation. Third, in digital economies, consumers often face significant challenges in making informed decisions about their privacy, due to a lack of transparency and understanding about when and how their data is collected and used. The article concludes by highlighting ongoing debates and issues in the privacy field that remain of interest to economists and policymakers.

This study explores the effects of agent anonymity on incentives and project selection in a setting where an evaluator assesses project quality based on subjective signals. The evaluator can choose between two review methods: informed review, where the agent's ability is directly visible, or blind review, where the agent’s identity is hidden. The ideal acceptance criterion aims to balance incentivizing agents to perform well and selecting the right projects. The findings reveal that informed review leads to an overly harsh evaluation for low-ability agents and too lenient a standard for high-ability agents. In contrast, blind review, which applies the same standard to all agents, tends to offer better incentives but overlooks valuable information for selecting projects. The study shows that the choice between informed and blind review depends on factors such as the distribution of agent abilities, the agent's rewards from project acceptance, and the precision of the quality signal. The research has practical implications for areas like criminal trials, where character evidence may be considered, and "tests" with a significant subjective component such as orchestral auditions or academic qualifying exams.

This research was among the first to explore how consumer privacy and the sale of customer information impact electronic retail markets. Specifically, it examines how online companies use customer data to identify individual buyers and charge personalized prices. Two scenarios are analyzed: one where customer information remains confidential and can't be sold, and another where one company can sell a customer list to another company, which then uses it to set personalized prices. The study finds that whether consumers expect their data to be sold—and how sensitive they are to price changes—are key factors in understanding the effects on overall consumer and market welfare.

This study examines how companies use special offers to encourage subscribers to switch providers in markets where goods or services are relatively close substitutes (e.g., creditcards, mobile phones, television delivery).  While this competition is common in subscription markets, it can reduce efficiency because it leads subscribers to spend time and resources on surfing between various providers. The research shows that competition becomes truly effective only when three or more companies operate in the market. In this scenario, companies offer new subscribers prices that are below cost, while loyal customers pay higher prices. As a result, each company makes some profit from its existing customers but breaks even on attracting new ones. When companies can monitor switching habits, some consumers may repeatedly change providers to build favorable reputations as price-sensitive switchers.

This research explores a dynamic scenario where individuals start with the same information about the macro environment (i.e., how favorable it is for investment).  Small teams of agents are randomly formed to undertake projects that either succeed or fail, providing updated information at the micro level.  As some unlucky agents experience repeated setbacks, they eventually stop investing in team production altogether.  This can trigger a "coordination avalanche" where, one by one, all participants cease activity. Such 'avalanches' are generally  inefficient; can occur at any stage; and do not depend on the actual macro conditions.   Even if participants can share information, this may only speed up the avalanche effect. The study has applications in areas like job search markets, organizational meltdowns, and costly, inefficient tech upgrades.

This study examines how the time a house spends on the market influences a potential buyer's perception of its quality and how sellers strategically set prices in response to these perceptions. Depending on what information is available (i.e., the history of offers), sellers might set an unusually high initial price to mask quality concerns or an unusually low price to encourage a quick sale and prevent a "herding" effect where buyers avoid homes on the market too long. Sellers of high-quality homes benefit most when inspection results are publicly available and fare worst when neither inspection results nor price history are visible. Costly inspections increase the chances of adverse selection but discourage the herding effect.

This research explores two different subcontracting systems that help companies manage quality control in their supply chains. In the "American" system, suppliers compete for each contract through bidding, which leads to large orders and routine inspections. By contrast, the "Japanese" keiretsu system favors ongoing relationships with trusted suppliers, involving smaller orders and no inspections, and suppliers earn a premium for consistent quality. While both approaches may work in different situations, the best choice depends on the balance between set-up and inspection costs. The shift from the American to the Japanese system in many industries may be linked to the rise in flexible manufacturing technologies and increasing product complexity.

Research projects are often difficult to manage with contracts because it’s hard to monitor the work involved and to verify the results. This paper was the first to suggest an alternative: hosting a research tournament, where multiple researchers compete to create the most valuable innovation for the sponsor. The winner receives a set prize, and a unique equilibrium exists in this competition, where each researcher’s effort depends on the number of participants. However, allowing too many contestants isn’t ideal, as it lowers the effort each one is likely to invest. An optimally designed research tournament balances the probability of overshooting the first-best quality target against the probability of falling short by the contest deadline.

This paper examines what drives bargaining power and pricing in a dynamic market where new traders join randomly over time. In such markets, traders who are in the majority—those on the "long side"—may still possess significant bargaining power due to the option to wait for other trading partners to enter. This waiting option affects the final terms of trade, as current deals must account for the potential benefits of waiting. The paper presents clear, formula-based expressions for the equilibrium prices that capture both the immediate market conditions and the long-term makeup of the trader population. This approach sheds light on how short-term and long-term factors uniquely shape market prices and bargaining power.

This paper looks at a market where the owner of a durable good (like teeth, a house, or a vehicle) relies on an expert for diagnosis and treatment. The good can be in one of three states: "healthy," "diseased," or "failed." Only the expert can tell if the good is actually diseased and needs treatment, so the owner cannot verify if a recommended treatment is truly necessary. This information gap drives risk-neutral consumers to seek health insurance to cover potential repair costs. However, imperfections in the market for spot insurance may give rise to free diagnostic checks by experts, strategic procrastination by owners, and long-term health maintenance agreements aimed at managing the good’s health over time.