Research interest: Microeconomic theory, in particular mechanism design, information economics, and verification; applications in public economics and industrial organization.
Job markets: EEA Meetings in Rotterdam, ASSA Meetings in San Diego.
A principal can allocate an indivisible good to an agent. The agent privately learns the value of the good while the principal privately learns the cost. Value and cost are correlated. The agent wants to have the good in any case. The principal wants to allocate whenever the value exceeds the cost. She cannot use monetary transfers to screen the agent.
I study how the principal utilizes her information in the optimal mechanism: when the correlation is negative, she bases her decision only on the costs, and when the correlation is positive, she screens the agent. To this end, she forgoes her best allocation opportunities: when the agent reports high valuations but her own costs are low. Under positive correlation, these realizations are unlikely; the principal will find them too good to be true. In contrast to standard results, this optimal mechanism may not allocate to a higher value agent with higher probability. I discuss applications to intra-firm allocations, task-delegation, and industry self-regulation.
We introduce a model of probabilistic verification into the standard mechanism design setting. The principal verifies the agent's type using a statistical test. The result of the test is stochastic; its distribution depends on the agent's true type. The principal commits to a mechanism that assigns a test to each message and then a decision based on the test result. In our framework, the revelation principle holds. We characterize whether each type can be identified with a test. If so, the principal's problem becomes an optimization subject to incentive constraints. Under quasilinear preferences, we solve for revenue-maximizing mechanisms by introducing a new expression for the virtual value that reflects the precision of the tests.
accepted at EC'19
A principal has to take a binary decision. She relies on information privately held by a completely biased agent. The principal cannot incentivize with transfers but can learn the agent's information at a cost. Additionally, the principal privately observes a signal correlated with the agent's type. Transparent mechanisms are optimal: unlike in standard results with correlation, the principal's payoff is the same as if her signal was public. They take a simple cut-off form: favorable signals ensure the agent's preferred action. Signals below this cut-off lead to the nonpreferred action unless the agent appeals. An appeal always triggers type verification.
Work in progress
Strategic Understatement (with Carl Heese)
We study the design of quality certificates. The certificate holder (sender) tries to convince a receiver of his quality. The receiver benefits from more precise knowledge about the sender’s quality and can costly verify the sender's quality. We show that if the certificate is too selective, in all equilibria, senders of very high quality do not present the certificate; they pool with low-quality types who do not hold a certificate. The high types forgo a signaling opportunity (``understatement’’), but thereby motivate the receiver to costly verify their high quality herself. Conversely, when the certificate is not too selective, there are monotone equilibria where higher types are more likely to present their certificates.
Policy Uncertainty and Signaling in Referenda (with Carl Heese)
We study voting on a reform for which the implementation is at the discretion of a politician who is biased against the reform. Valuable information about the efficacy of the reform is dispersed among citizens, and by voting, citizens can transmit their information to the politician. When the politician has no discretion, the Condorcet Jury Theorem holds (Feddersen & Pesendorfer, 1998). When the politician has full discretion, in all equilibria, there is no information transmission at all (Battaglini, 2017). We consider a scenario of ``intermediate discretion’’ akin to political referenda. When the majority votes against the reform, the status quo is kept. Otherwise, the politician is bound to implement the reform but can choose the degree of implementation. This creates one-sided signaling incentives for the voters. Even when the politician is only slightly biased against the referendum, there are equilibria with ``oversignaling’’ for which the reform always passes, even in the situations where all citizens and the politician prefer it not to.