Abstract: I develop a game-theoretic framework to study the repercussions of an evaluator’s bias against a specific group of applicants. The evaluator decides upfront between holding an informed or a blind audition. In the latter, the evaluator learns neither the applicant’s ability nor the gender. I show that, above a threshold bias, the evaluator prefers a blind audition to provide high effort incentives exclusively for high-ability applicants. Consequently, committing to no information can be beneficial for the evaluator. I also show that a highly biased evaluator’s preferences align with those of a highly able female. I extend the framework to performance uncertainty and gender-blind CVs and compare blind auditions to affirmative action. The framework is relevant for auditory-based applications: my results can explain why blind auditions have increased the probability of a female orchestra musician being hired via taste-based discrimination and challenge explanations grounded in statistical discrimination.
Abstract: Although online marketplaces for handmade products are thriving, little theoretical research has been undertaken to explain why firms choose a handmade strategy. In this paper, I develop a model that can explain the trend through a handmade effect on the consumer side. I show that when consumers are willing to pay a sufficiently high handmade premium, the firm chooses production by hand over superior machine production. When the firm is part of a duopoly, the existence of consumers caring about the conditions under which a product is manufactured can explain the firms' specialisation and, thus, the observed co-existence of handmade and machine-made products in the economy. Such specialisation is efficient, and can be robust to collusion. The presence of shoppers who are uncertain about the appropriate behaviour may enable the monopolist to use a handmade strategy to signal a social norm of conscious consumption.
Conform or Reveal? The Effect of Heuristics on Behaviour (with Matthew Robertson, Coventry University)
Abstract: We study heuristic decision-making in social settings without communication. Players trade off conforming to the average action and matching their private type, which is correlated with the state of the world. We contrast individual and aggregate behaviour under two heuristics as well as rationality: credulous players posit others truthfully reveal their types whilst sceptical players reflect on predecessors' actions to edit the history of play; in contrast, rational players take into account the extent to which others wish to conform. We apply our results to organisational decision-making and social engineering, and show that, by making a credulous player sceptical, a policy maker can increase truth telling. Making a player rational, in contrast, does not guarantee that more players truthfully reveal. At the aggregate level, rationality is not only necessary to incentivise players to adopt the action matching the state, but also preferable given a utilitarian objective. Making the state common knowledge can be a viable alternative whenever a policy maker prefers truth telling if and only if a player's type matches the state.
Abstract: We develop a model of recommendations. Its key element is a culture that may lead to reciprocation by the recommendee. In contrast to previous literature, we assume that this is costly for the recommender (expert). A strong culture may cause the expert to forego recommendations. Moreover, it can reverse a segregation pattern arising from a preference to associate with similar others to one in which the expert seeks out dissimilar others. In contrast, when the expert prefers to associate with dissimilar others, we find a robust increase in recommendations across cultures. Interestingly, uncertainty about the degree of similarity can mute the effect of culture and lead to the optimality of a single recommendation. Our theory of costly reciprocity can explain the observed negative relationship between expected reciprocity and the quantity of communication, and provides a novel perspective on social exchange.
Presentations: accepted at the 2020 ExSIDE doctoral workshop.