Undominated Monopoly Regulation, with Debasis Mishra, Journal of Economic Theory, (2025): 106049

Abstract: We study undominated mechanisms with transfers for regulating a monopolist who privately observes the marginal cost of production. A mechanism is undominated if no other mechanism gives the regulator a strictly higher payoff at some marginal cost of the monopolist without lowering the regulator’s payoff at other costs. We show that an undominated mechanism has a quantity floor: whenever the monopolist is allowed to operate, it produces above a threshold quantity. Moreover, the regulator's operation decision is stochastic only if the monopolist produces at the quantity floor. We provide a near-complete characterization of the set of undominated mechanisms and use it to (a) derive a max-min optimal regulatory mechanism, (b) provide a foundation for deterministic mechanisms, and (c) show that the efficient mechanism is dominated.

Arxiv Version

Optimal Sample Sizes and Statistical Decision Rules, with Yuval Salant, Theoretical Economics, 19 (2024), No. 2, 583–604

Abstract: A statistical decision rule is a mapping from data to actions induced by statistical inference on the data. We characterize these rules for data that are chosen strategically in persuasion environments. A designer wishes to persuade a decision maker (DM) to take a particular action and decides how many Bernoulli experiments about a parameter of interest the DM can obtain. After obtaining these data and estimating the parameter value, the DM chooses to take the action if the estimated value exceeds some threshold. We establish that as the threshold changes, the resulting statistical decision rules in many environments are either simple majority or reverse unanimity.

Robust Procurement: Bayesian Design under Worst-Case Approval Constraints, with Debasis Mishra and Alessandro Pavan, Accepted for presentation at EC'25 conference

Abstract: We study optimal procurement when a Bayesian designer must obtain approval from a non-Bayesian authority that shares the designer’s objective but is uncertain about the value of the good and the supplier’s cost. The designer uses a conjectured model to compute expected payoffs but is constrained to select among mechanisms delivering the largest payoff guarantee to the authority. This robustness requirement reshapes the tradeoff between efficiency and rent extraction: it increases procurement from the least efficient sellers but reduces it from sellers with intermediate costs. When the good is sold in a market, we show that quantity regulation dominates price regulation if markups under the conjectured model are large, whereas price regulation dominates when demand uncertainty is substantial.

Supplementary Material

Arxiv Version

Strategic Justifications (Being Updated...)