Research

This paper examines an agent's optimal timing for submitting a project proposal under imperfect evaluation. The model has a unique equilibrium. The agent's spoofing, i.e., submitting preliminary work without true success, causes welfare losses (e.g., the principal erroneously accepting a spoofed proposal), even when the agent can achieve success at an infinite rate or becomes arbitrarily patient. The principal can benefit from a long-term relationship where the agent can resubmit after rejection, provided the principal is sufficiently patient. However, resubmission opportunities make the agent worse off. These findings highlight the limitations of deliverable-based performance management in one-time and long-term partnerships.

Affiliate marketing is a prevalent performance-based marketing model in which retail platforms offer individuals to register as their affiliates and receive access to unique affiliate links---links that allow tracking by the retailer. Commonly, retailers compensate their affiliates per click and/or per purchase. Our results show that by choosing its affiliate compensation model, a retailer can affect the equilibrium in the market for recommendations in a way that has significant implications for consumer surplus, affiliates' revenues, aggregate welfare, and, ultimately, the retailer's profits.

Interestingly, pay-per-click incentives create a conflict of interest between affiliates and consumers. On the one hand, consumer surplus is maximized under recommendation conformity, i.e., convergence of affiliates' recommendations on a single product. On the other hand, affiliates achieve the highest aggregate payoffs by minimizing or maximizing recommendation conformity under pay-per-click and pay-per-purchase, respectively. Surprisingly, especially when both consumers and affiliates prefer recommendation conformity, a conformity equilibrium may not exist. In contrast, a non-conformity equilibrium always exists. Consumers' expected search length, affiliates' product information accuracy, and consumers' ability to learn directly about products' qualities also subtly affect the compensation models that admit conformity equilibria. 

Finally, we show that whether a retailer platform prefers a conformity or non-conformity equilibrium (and subsequently whether it will choose the pay-per-click or pay-per-purchase compensation) depends on how well the retailer sells additional products to a consumer who visits its website.

In many advice markets, experts often assertively recommend that clients take a specific action, but they are vague about the probability of the action's outcomes, making the recommendation ambiguous. This paper analytically investigates this phenomenon and the mechanism of the underlying marketing tactic by incorporating the client's optimism and attitudes toward ambiguity into a strategic communication framework. 

In equilibrium, the expert will assert a range of probabilities within which the recommended action turns desirable for the client, whose lower end is strictly below the precise observation based on his or her expertise. When the client cannot exert effort to disambiguate the expert's message, the expert benefits from the client's greater optimism and lower aversion to ambiguous information. Interestingly, when the client exerts costly effort, the expert can leverage the client's ambiguity attitude. As the client becomes more ambiguity averse, precise information about the less preferable option becomes even less preferable, so that the client's greater ambiguity aversion mitigates the ambiguity of the information about the focal option, inducing the expert to send a more ambiguous message.

In influencer marketing, marketers can leverage the attention of followers through sponsored content posted by influencers and social learning among followers via interactions with these posts. We explore how a marketer can optimally leverage influencer marketing using these distinctive features. The decision to encourage social learning or to focus solely on awareness depends on the initial uncertainty of the product quality, and the amount of resulting learning depends on the endogenous influencer's choice of creative contribution to the campaign. 

Social learning is valuable to the marketer only if the option value from learning is high because the brand is relatively unknown a-priori. When influencers value consumer surplus, they create less creative (and more informative) content than what is optimal for the marketer in terms of learning. Furthermore, our analysis demonstrates that for an unknown brand, a mega influencer with a large following fosters more information aggregation and yields higher profits. In contrast, for an established brand, using many micro-influencers with fewer followers yields higher profits by creating attention while minimizing learning about the product. Our model also explains why influencer campaigns either "go viral" or "go bust."

Social media influencers allow marketers to reach audiences using more authentic and credible messaging. Among influencers, marketers need to decide which types of influencers to contract with, what information to give them and how much to pay them.

We analyze the impact of influencer recommendation types on marketer profits, consumer satisfaction, and influencer payoffs. Counter to intuition, we find that shallow influencers, who promote the marketer's message as is, increase market transparency, consumer satisfaction and marketer profits. However, prudent influencers, who carefully review products they promote, entice the marketers to reduce information efficiency in the market, and increase the share of unsatisfied consumers through Bayesian persuasion. In a market with simultaneously active shallow and prudent influencers, prudent influencers may increase their payoff even further by extracting additional information rent.

The results provide insight into the value of shallow influencers and guidance for marketers who consider using influencer marketing.

1. Irreducibility of the Hilbert schemes of points on surfaces with Kleinian singularities. Communications in Algebra, 51(1), 98-115, 2023.

2. Counterexamples of Kodaira vanishing for smooth surfaces of general type in positive characteristic. Journal of Pure and Applied Algebra, 221(10), 2431-2444, 2017.