Job Market Paper
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I study how a revenue-maximizing principal allocating a single good
should optimally design her auction in the presence of collusion. The
principal evaluates mechanisms according to the worst- case revenue
that could arise from collusive or non-collusive play. The principal’s
optimal mechanism is to post a price and run an efficient knockout
auction in-house. Once the principal controls for the cost function, a
function induced by the form of the mechanism she sets, the
principal’s interests and the bidders’ interests are aligned. As part
of the solution, the principal solves a constrained
surplus-maximization problem. Posting a price and running the
efficient knockout in-house remains the optimal mechanism when the
principal additionally hypothesizes that colluders are maximizing
their joint surplus or are constrained by interim truth-telling
constraints. With surplus-maximizing colluders, posting a price
without running the knockout in-house is also an optimal mechanism.
View on SSRN →
A principal sets bonuses for agents to ensure that the induced game
will have a unique outcome where all agents work rather than shirk. I
explore three notions of outcomes: (1) Nash equilibrium (2) correlated
equilibrium (3) rationalizability. It is weakly more expensive for the
principal to uniquely implement working under (1) than under (2) which
in turn, is more expensive than implementing under (3). I show that
when the production technology is anonymous, these weak inequalities
in cost hold at equality. When I weaken the assumption of anonymity to
a condition I call aligned marginal contributions, there can be a gap
between uniquely implementing under Nash compared to correlated
equilibrium, but there remains no gap between implementing under
correlated equilibrium compared to rationalizability. Finally, I
provide a sufficient condition under which there is a strict gap
between achieving unique correlated equilibrium and unique
rationalizable strategies.
Welfare Effects of Market Research
(Draft coming soon!)
I study how an upstream market research firm provides information
about demand conditions to a downstream product market. Demand can be
high or low. The market research firm provides private signals to
atomistic firms that compete with each other by producing quantities
of an undifferentiated product. The market research firm chooses its
information to maximize the fee it collects. I solve for equilibria of
this game and demonstrate that the market research firm chooses an
equilibrium to maximize the joint producer surplus. In environments
where uncertainty about demand is small and strategic externalities
between producers are weak, full information maximizes consumer,
producer, and total surplus. In other environments, consumer,
producer, and total surplus are not necessarily aligned.