Department of Economics
University College London
I am an Assistant Professor at the Department of Economics at University College London and a Research Affiliate at CEPR. I specialize in Economic Theory and Industrial Organization. I am interested in a wide range of topics such as dynamic nonlinear pricing of durable and storable goods, network and coalition formation, and secondary markets. Here is my .
The Ratchet Effect: A Learning Perspective,
joint with V. BhaskarJournal of Economic Theory, Vol. 214, December 2023
We examine the ratchet effect under moral hazard and symmetric learning by worker and firm about new technology. Shirking increases the worker’s future payoffs, since the firm overestimates job difficulty. High-powered incentives to deter shirking induce the agent to over-work, since he can quit if the firm thinks the job is too easy. With continuous effort choices, no deterministic interior effort is implementable. We provide conditions under which randomized effort is implementable, so that a profit-maximizing distribution over efforts exists.
Consumer Privacy and Serial Monopoly,
joint with V. BhaskarRAND Journal of Economics, Vol. 52, No. 4, Winter 2021
We examine the implications of consumer privacy when preferences today depend upon past consumption choices, and consumers shop from different sellers in each period. Although consumers are ex ante identical, their initial consumption choices cannot be deterministic. Thus ex post heterogeneity in preferences arises endogenously. Consumer privacy improves social welfare, consumer surplus and the profits of the second-period seller, while reducing the profits of the first period seller, relative to the situation where consumption choices are observed by the later seller.
I develop a model of collaboration between tournament participants in which agents collaborate in pairs, and an endogenous structure of collaboration is represented by a weighted network. The agents are forward-looking and capable of coordination; they value collaboration with others and higher tournament rankings. I use von Neumann-Morgenstern stable sets as a solution. I find stable networks in which agents collaborate only within exclusive groups. Both an absence of intergroup collaboration and excessive intragroup collaboration lead to inefficiency. I provide a necessary and sufficient condition for the stability of efficient outcomes in winner-takes-all tournaments. I show that the use of transfers does not repair efficiency.
Quantitatively, we investigate the allocative and welfare effects of secondary
markets for cars. An important source of gains from trade in these markets is
the heterogeneity in the willingness to pay for higher-quality (newer) goods,
but transaction costs are an impediment to instantaneous trade. Calibration of
the model successfully matches several aggregate features of the U.S. and
French used-car markets. Counterfactual analyses show that transaction costs
have a large effect on volume of trade, allocations, and the primary market.
Aggregate effects on consumer surplus and welfare are relatively small, but
the effect on lower-valuation households can be large.
This paper develops a model of nonlinear pricing of storable goods. We show
that storability imposes novel constraints on a monopolist's ability to
extract surplus. We then show that the attempt to relax these constraints
can generate cyclical patterns in pricing and sales, even when consumers are
homogeneous. Thus, the model provides a novel explanation for sales that
does not rely on discriminating heterogeneous consumers. Enriching the model
to allow for buyer heterogeneity in storage technology, delivers the
prediction that larger bundles are more likely to be on sale.
We analyze the diffusion of rival information in a social network. In our model, rational agents can share information sequentially, unconstrained by an exogenous protocol or timing. We show how to compute the set of eventually informed agents for any network, and show that it is essentially unique under altruistic preferences. The relationship between network structure and information diffusion is complex because the former shapes both the charity and confidentiality of potential senders and receivers.
We study optimal monopoly pricing with evasive consumers. The monopolist uses consumer data to estimate demand and menu pricing to optimally screen the residual uncertainty about consumers’ preferences. Third degree price discrimination encourages data-conscious consumers to manipulate their observable attributes (at a cost). This reduces the precision of demand estimation, sometimes rendering the consumer data useless. We derive the monopolist’s gains from using data and characterize the optimal investigation strategy. We find that randomly restricting monopolist’s access to consumer data may increase profit.
Stores versus Storage, [coming soon!]
joint with V. Bhaskar