Working Papers 

Faking Network Size (August, 2024) 

Abstract:  Users have an incentive to join large platforms, and hence platforms want to convince users that they have a large user base. I consider a monopolist platform's incentive and ability to signal its user base when there is uncertainty regarding the amount of potential users. The platform can signal using either fake accounts or prices. When - as in some real-world examples - users are naive regarding the platform's ability to use fake accounts, small platforms use them to profit from the artificial increase in demand. If users are sophisticated, larger platforms use fake profiles to differentiate themselves from smaller ones, and - in contrast to the case of naive consumers - platforms would benefit from a ban on such business practices. 

 Opportunism Problems of Colluding Manufacturers (with M. Hunold, J. Muthers, and A. Rasch, November 2022) 

Abstract: With two exclusive manufacturer-retailer pairs and secret contracting, we show that manufacturer collusion can be infeasible. Crucially, we establish that the stability of collusion depends on retailers’ beliefs about their competitor’s wholesale price offers. We demonstrate that beliefs that depend on the history of wholesale prices can enable collusion. With a new set of beliefs that match the manufacturers’ trigger strategies, collusion is even renegotiation-proof under a novel condition of opportunism-proofness. We show that these beliefs, however, are too inflexible to allow for the formation of manufacturer collusion, and we introduce adaptive beliefs that allow for successful cartel formation.

Dating Platforms: The Case of Fake Profiles (with A. Rasch, October 2021)

Abstract: This paper examines the use of fake profiles by two-sided platforms to stimulate demand and increase profits. By deceiving naïve users, platforms invest into an artificial increase of the network size on one side of the market. Whereas firms are caught in a prisoner’s dilemma if users single-home on both sides of the market, users are protected by platform competition. If users on one side of the market multi-home, firms can increase their prices for the multi-homing side, and they lower their prices for the single-homing side. Investments into fake profiles stimulate demand, such that multi-homing demand and profits increase. Platforms and users as a group can profit from investments under these circumstances.

Available upon request.

Work in Progress

(Mis-) Matchmaker

Draft coming soon.