1- Bargaining in Legislatures Over Private and Public Goods with Endogenous Recognition, with Serkan Küçükşenel, Public Choice, 181, 2019, 351-373
1- Other-Regarding Preferences in Adverse Selection (Job Market Paper, Draft available upon request)
Abstract:
This study aims to provide new theoretical insights about non-linear pricing in both monopoly and oligopoly by combining the classical principal-agent framework with the Fehr and Schmidt (1999) type of other-regarding preferences. In particular, we offer a new theoretical model that characterizes both status-seeker and inequity-averse buyers in monopoly and common agency. In the monopoly part, we show that when the buyer is a status-seeker (inequity averse), the equilibrium reflects higher (lower) optimal quality and increased (decreased) market inefficiency compared to scenarios with self-interested buyers. Furthermore, we conduct an analysis of the ex-ante consumer surplus of the other-regarding buyers and the ex-ante profit level of the seller, comparing these findings with those derived from the traditional monopolistic screening approach. In the second part, we focus on the common agency framework and introduce the Fehr and Schmidt (1999) type of other-regarding preferences into the model. We show and find the optimal symmetric quality and non-linear pricing schedule when the buyer has other-regarding preferences. Additionally, our conclusion indicates that if the buyer’s type is sufficiently high, inclination toward being more status-seeking (or more inclined toward inequity aversion) results in an increase (or decrease) in optimal quality, irrespective of whether the goods are complements or substitutes.
2- Sabotage and Social Preferences in Endogenous Rent-Seeking Contests with Serkan Küçükşenel (Draft available upon request)
Abstract:
This paper studies a rent-seeking contest in which the prize is endogenously determined. Contestants allocate their resources between rent-seeking effort and sabotage. While earlier studies show that equilibrium effort in fixed-prize contests may be unaffected by sabotage, we demonstrate that this result does not extend when the prize grows with total effort. Rent-seeking effort increases both the winning probability and the size of the prize, whereas sabotage lowers it by weakening rivals’ contributions. We characterize the symmetric equilibrium and study how parameters such as group size and prize sensitivity shape outcomes. We then extend the model by introducing a simple one-parameter formulation of social preferences. Our findings indicate that status-seeking increases both rent-seeking effort and sabotage, whereas inequity aversion can lead to sabotage with an equalizing effect. The analysis illustrates how behavioral motives, together with the contest design, shape whether competition leads to rent creation or dissipation.
3- Information Design with Bayesian Persuasion in Endogenous Rent-Seeking Contests (Draft available upon request)
Abstract:
This paper develops a theoretical model of Bayesian persuasion in rent-seeking contests with an endogenous prize, where contestants’ efforts are productive and contribute to the total rent. Departing from the standard framework where the prize is fixed, we model the rent as the sum of a fixed component and a surplus generated by the aggregate effort. Our findings reveal that under one-sided incomplete information, different from exogenous rent-seeking contests, the optimal information disclosure policy depends jointly on the marginal cost of effort and the marginal return of aggregate effort. Compared to standard models with exogenous prize, productive efforts tighten the conditions under which information disclosure is beneficial, as the surplus diminishes the strategic importance of type uncertainty. In a two-sided incomplete information setting, we observe a non-monotonic relationship between posterior beliefs and effort levels, complicating the contest designer’s decision to disclose information. Our results highlight how endogenous rent structures reshape the strategic landscape of information design in contests.
1- Trading with the Endowment Effect: A Bilateral Auction Approach
2- Bayesian Persuasion in Legislative Bargaining
3- Social Preferences in Distributive Politics: Modeling Legislative Bargaining