Research
Fields of Interest: Industrial Organization, Microeconomic Theory
My Thesis (link)
Working Papers:
Ordered Search: Equilibrium and Optimum (with Simon Anderson and Maxim Engers)
Abstract: We introduce an ordered-search model with a heterogeneous consumer search-cost distribution to model firm pricing with both consumer and firm heterogeneity. This enables us to leverage recent theoretical results from differentiated-oligopoly theory to provide a rich cross-section characterization of industry mark-ups, demand, and consumer search patterns. We characterize the unique equilibrium with hidden prices, with advertised prices, with positively correlated search costs, and when consumers have idiosyncratic mean product qualities. For iid match-value distributions, firms with higher quality-costs have higher equilibrium mark-ups but still sell more. Comparing optimal to equilibrium search, consumers search more products in a sufficiently covered market, while consumers search less if firms are symmetric. Equilibrium pricing compresses the distribution of search orders. These results are more pronounced if prices are hidden compared to advertised: equilibrium pricing expands the distribution of search orders. We next allow firms to differ in search accessibility and mean quality, benchmarking so that the advertised price equilibrium is symmetric. Then we find a composition effect under hidden prices that more accessible firms (with corresponding lower intrinsic quality) have lower mark-ups, higher demands, and tend to be searched earlier and more often.
Consumer Journeys with Nested Weitzman Scores and Informational Complementarities (with Simon Anderson and Maxim Engers)
Abstract: We formulate consumer search as a protracted process of gathering information in several stages. Information is not necessarily product-specific but may pertain to several products. This approach to consumer choice allows intuitively appealing properties ruled out by the standard models (both with search and without): standard discrete-choice models imply that all products are substitutes whereas complementarities can emerge naturally under our approach. Products exhibit drafting effects on other products nearby in the information structure: lowering a product's price induces consumers to gather more information about it, thus increasing interest in nearby alternatives in the information structure. We engage and expand to multi-stage search the classic results that characterize optimal simple search via a stopping rule and score values for options. We formulate the solution to the layered search problem using three types of score, corresponding to a simple heuristic which can nonetheless reflect sophisticated optimization. Consumers follow a sequential search protocol, searching ordered untried information nodes ranked by their scores until they find an option whose score exceeds that of all untried nodes. The informational proximity of products can have significant policy implications. Traditionally, regulators ban mergers between producers of close substitutes, because reduced competition raises prices. Nevertheless, if varieties are informationally close, demand complementarity lowers prices, directly to the benefit of consumers. This implies a fundamental rethinking of how demand is actually structured in terms of product closeness in the new informational environment.
Alternative Contract Frameworks in Nash-in-Nash Bargaining Models (with Alex Gross)
[Paper]
Abstract: We derive equilibrium properties of several contract frameworks within a Nash bargaining model. We find that retail price coordination is the equilibrium contract choice when firms can select from among multiple contract frameworks and is second best for consumers. We show that framework restrictions in our bargaining model affect the identification of model primitives and evaluation of both horizontal and vertical mergers. In particular, we show that a horizontal merger can be consumer welfare-enhancing even in the absence of cost efficiencies if firms collude to set an industry-wide contract restriction.
More Than Just a Weighted Average: Economic Statistics with Auto Specs Grading (with Mai Savelle)
[Paper]
Abstract: We examine the implementation of specifications (specs) grading in the Economics Statistics course at a liberal arts college using automated online quizzes. We find evidence that automated specifications (auto specs) grading improved student performance, engagement with key material, and course evaluations. However, attendance in class and office hours was negatively affected likely due to the asynchronous timing of evaluations, ability to retake quizzes, and immediate clarity of the student’s current grades. While implementation of this grading scheme involved significant upfront investment from the instructor, this change decreased grading time and freed up class time previously dedicated to taking exams.