See below for abstracts of all my completed papers.
Listen Before You Link: Optimal Monitoring Rules for Communication Networks, Games and Economic Behavior, May 2022, 133: 230-247. https://doi.org/10.1016/j.geb.2022.03.004
I consider environments where communication networks are endogenous, but monitoring rules enforce agents to ask consent from others to form new links or break their existing links. A monitoring rule consists of a number x and a collection of groups O such that each agent requires consent from x number of agents in every group he belongs to. First, I show that efficient networks can have at most a single component when externalities are positive, whereas they can have multiple components when externalities are negative. Second, I study monitoring rules that can stabilize efficient networks. I find that partitioning the set of agents into groups based on the components of the efficient network forms the “smallest groups” that can internalize all of the externalities; therefore, it can stabilize the efficient network with the minimum number of monitors. I relate this finding to the widespread adoption of “small work groups with few monitors” (like Quality Circles) by quality management programs to enhance communication between developers.
Keywords: Communication Networks, Organizations, Externalities, and Consents.
JEL Codes: D85, D62.
Targeting in Networks Under Costly Agreements, with Mohamed Belhaj and Frédéric Deroïan, Games and Economic Behavior, July 2023, 140: 154-172. https://doi.org/10.1016/j.geb.2023.03.003
We consider agents organized in an undirected network of local complementarities. A principal with a limited budget offers costly bilateral contracts in order to increase the sum of agents’ effort. We study excess-effort linear payment schemes, i.e. contracts rewarding effort in excess to the effort made in absence of principal. The analysis provides the following main insights. First, for all contracting costs, the optimal unit returns offered to every targeted agent are positive and generically heterogeneous. This heterogeneity is due to the presence of outsiders, who create asymmetric interaction between contracting agents. Second, when contracting costs are low, it is optimal to contract with everyone and optimal unit returns are identical for all agents. Third, when contracting costs are sufficiently high, it becomes optimal to target a subset of agents, and optimal targeting can lead to NP-hard problems. In particular, when the intensity of complementarities is sufficiently low, a correspondence is established between optimal targeting and the densest k subgraph problem. Overall, the optimal targeting problem involves a trade-off between centrality and budget spending — central agents are influential, but are also more budget-consuming. These considerations can lead the principal to not target central agents.
Keywords: Networked Synergies, Aggregate Effort, Optimal Group Targeting, Linear contract.
JEL Codes: C72, D85.
Job Market Signalling Via Social Ties
* Winner of 2019 LAGV prize for “Best paper by a Young Researcher” in the ASSET conference.
When there is asymmetric information about abilities of applicants, employees can “signal” — recommendation letter or put in a good word —some of this information to firms by recommending applicants they personally know. I consider how employees strategically transmit information to firms when there are both gratitude benefits for recommendations and reputation costs for providing inaccurate information. Unlike the classic setting of job market signalling by applicants, senders (employees) can now have imperfect information about abilities and my analysis builds upon this feature. I then develop two applications of this model which consider the strategic “selections” of ties and hiring channels by applicants. This allows me to help explain mixed evidences about the returns to using different types of ties (weak vs strong) and hiring channels (formal market vs social tie), as well as the relatively higher use of social ties by low skill/ability applicants. My analysis shows that public policies aimed at more social/racial integration can help firm’s ability to screen applicants using referrals, and therefore improve efficiency of referrals as a screening mechanism.
Keywords: Signalling, Social Ties, Referrals, Hiring Channels, and Social/Racial Integration.
JEL Codes: D82, D85, J15, J18, J31.
Costly Knowledge and Costly Communication
I consider environments where an expert faces both costs of acquiring information and “transmitting inaccurate information” (misreporting) when advising a decision- maker (DM), which fills an important gap in the strategic communication literature. There are two main features of the equilibria: (1) The expert is weakly “overreporting” in that every type sends a weakly higher message than truth-telling. (2) The expert always “reveals his type through his equilibrium message”, resulting in “full communication”. I show that when communication (misreporting) is sufficiently cheaper than information acquisition, the magnitude of overreporting is high and optimal information structures are partitions with increasing interval lengths. An important implication of this finding is that, when misreporting cost is small enough, the DM can obtain “finer” information about higher states by acquiring the costly information himself rather than asking an expert. I relate this finding to the fact that, when firms are screening applicants for “high-skill” jobs, they tend to rely more on “direct measurements” (aptitude tests and other attribute measurements) rather than employee referrals.
Keywords: Communication, Information Acquisition, Misreporting Costs, and Signalling.
JEL Codes: D82, D83.
Strategic Communication with One-Sided Lying Costs
I consider strategic communication with lying costs, but with a relevant twist: lying costs are one-sided — if reality is more favorable than what’s reported, then no harm is done and no cost in incured (“no harm, no foul”). My analysis is divided into parts: first, I consider the case where the sender has perfect information about the state; second, I consider the case where the sender only has imperfect information about the state. In both settings, I find that the one-sided nature of lying cost ensures “language inflation” (overreporting) to occur — this is because when “language deflation” (underreporting) is costless, language inflation is necessary to separate oneself from lower types. In addition, when the sender has imperfect information about the state and the intensity of lying cost is sufficiently large, the magnitude of language inflation is smaller under one-sided than two-sided lying costs. Thus, the imperfect information setting provides a rationale for the prevalence of situations involving one-sided lying costs — the one- sided nature of lying cost acts as a “discipline device” in that it reduces the magnitude of sender’s language inflation and improves the level of information transmission.
Keywords: Strategic Communication, One-Sided Lying Costs, and Language Inflation.
JEL Codes: D82, D83.
Strength of Weak Experts: Knowledge vs Communication
I explore whether the more-informed expert is also more informative to the decision- maker; in other words, is the expert with more precise information also better at communication (information transmission)? In order to examine this question, I consider the model of strategic communication with lying costs à la Kartik (2009), with the innovation that the expert has imperfect information about the state of the world. Contrary to what one might think, I find that the more-informed expert is not necessarily more informative to the decision-maker. I relate this finding to the “strength of weak ties” phenomenon in the referrals literature.
Keywords: Signalling, Precision of Information, and Information Transmission.
JEL Codes: D82, D83.