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I am interested in Economic Theory, especially in information economics (the analysis of the strategic decisions of agents to acquire, share, and use information) and in how information asymmetries affect incentives.

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João Ramos

Assistant Professor of Finance and Business Economics
Office: HOH 205,
3670 Trousdale Pkwy,
Los Angeles, CA 90089,
United States


Published and Forthcoming

We study how networks of informational flows are formed. We develop an endogenous network formation model, in which agents form connections to acquire information. Our model features complementarity in actions as agents care not only about accuracy of their decision making but also about the actions of other agents. In equilibrium, the information structure is a hierarchical network, and, under weakly convex cost of forming links, the equilibrium network is core-periphery. Even if agents are ex-ante identical, there is ex-post heterogeneity in payoffs and actions. Finally, we study how individual characteristics determine agents' roles in the network.

In an ongoing relationship of delegated decision making, a principal consults a biased agent to assess projects’ returns. In equilibrium, the principal allows future bad projects to reward fiscal restraint, but cannot commit to indefinite rewards. We characterize equilibrium payoffs (at fixed discounting), showing that Pareto optimal equilibria are implemented via a two-regime `Dynamic Capital Budget’. Rather than facing backloaded rewards—as in dynamic agency models with commitment power—the agent loses autonomy as time progresses.

The Wrong Kind of Information
The Rand Journal of Economics
joint with Aditya Kuvalekar and Johannes Schneider

Agents, some with a bias, decide between undertaking a risky project and a safe alternative based on information about the project's efficiency. Only a part of that information is verifiable. Unbiased agents want to undertake only efficient projects, while biased agents want to undertake any project. If the project causes harm, a court examines the verifiable information, forms a belief about the agent's type, and decides the punishment. Tension arises between deterring inefficient projects and a chilling effect on using the unverifiable information. Improving the unverifiable information always increases overall efficiency, but improving the verifiable information may reduce efficiency.

An expert advises a decision maker over time. With both the quality of advice and the extent to which it is followed remaining private, the players have limited information with which to discipline each other. Even so, communication in and of itself facilitates cooperation, the relationship evolving based on the expert’s advice. We show a formal equivalence between our setting and one of cheap talk with capped money burning, enabling an exact characterization (at fixed discounting) of the expert’s attainable payoffs. While an ongoing relationship often helps, our characterization implies that, absent feedback, relational incentives can never restore commitment.

We study whether college admissions should implement quotas for lower-income applicants. We develop an overlapping generations model and calibrate it to data from Brazil, where such a policy is widely implemented. In our model, parents choose how much to invest in their child’s education, thereby increasing both human capital and likelihood of college admission. We find that, in the long run, the optimal income-based affirmative action increases welfare and aggregate output. It improves the pool of admitted students but distorts pre-college educational investments. The welfare-maximizing policy benefits lower- to middle-income applicants with income-based quotas, while higher-income applicants face fiercer competition in college admissions. The optimal policy reduces intergenerational persistence of earnings by 5.7% and makes nearly 80% of households better off.

Working Papers

We examine the efficiency gains of introducing a pre-play phase—allowing agents to communicate while incrementally committing to their words—in coordination environments. We consider a particular pre-play institution for which the efficient equilibrium is unique in the extended game, and we test the environment in the lab. We focus on weaklink games, a coordination game with multiple Pareto ranked equilibria, in which an inferior equilibrium is often observed in experimental settings. We first show that the institution intertwining communication and incremental commitment significantly increases subjects' payoffs, even when compared to rich pure communication protocols. Aligned with theoretical predictions, commitment changes the way players communicate—affecting what is a player says and, moreover, how others interpret it. Finally, we focus on the road to efficiency; we analyze agents’ dynamic behavior as they try to coordinate, and we show that this behavior is closely aligned with theoretical predictions. The results shed new light on how pre-play institutions can mitigate coordination failures and highlight communication and incremental commitment as key features.

We study a continuous-time model of partnership, with persistence and imperfect state monitoring. Partners exert private efforts to shape the stock of fundamentals, which drives the pro ts of the partnership, and the profits are the only signal they observe. The near-optimal strongly symmetric equilibria are non-Markovian and are characterized by a novel differential equation that describes the supremum of equilibrium incentives for any level of relational capital. Imperfect monitoring of the fundamentals helps sustain incentives, due to deferred incentives, and increases the partnership's value (Sand in the wheels). Good profit outcomes rally the partners to further increase effort when relational capital is low, but lead them to coast and decrease effort when relational capital is high. Even partnerships with high fundamentals may unravel after a short spell of terrible signals (Beatles' break-up).

Viewing the relationship between politicians and voters as a principal-agent interaction afflicted by moral hazard, we examine how political careers are shaped by the incentives that voters provide incumbents to work in the public interest. When moral hazard binds, the optimal way for voters to hold politicians accountable is to provide re-election incentives that evolve dynamically over their careers in office. Under these incentives, first-term politicians are among the most electorally vulnerable and the hardest-working; politician effort rises with electoral vulnerability; electoral security increases following good performance and decreases following bad; and both effort and electoral vulnerability tend to decline with tenure. In extensions, we study limited voter commitment, voluntary retirement from politics, and adverse selection.


French - Mother Tongue

Teaching at USC Marshall

Microeconomics for Business

Topics in Microeconomic Theory II (PhD level)

Teaching at Queen Mary university of London

Strategy, Leadership and Management of Investment Banks

Microeconomic Theory II (PhD level)

Fall 2016, 2022

Spring 2017, 2018, 2019, 2020

Spring 2021, 2022

Spring 2022

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