Published and Forthcoming
joint with Bernard Herskovic
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.
joint with Elliot Lipnowski
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.
Revise and Resubmit at AER
joint with Ala Avoyan
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.
Revise and Resubmit at ReStud
joint with Tomasz Sadzik
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).
Revise and Resubmit at JET
joint with Bernard Herskovic
Popular Press (Daily Bruin)
Popular Press (Anderson Review)
This paper investigates the implications of affirmative action in college admissions for welfare, aggregate output, educational investment decisions and intergenerational persistence of earnings. We construct an overlapping-generations model in which parents choose how much to invest in their child's education, thereby increasing both human capital and likelihood of college admission. Motivated by a recent policy implemented in Brazil, we calibrate the model to quantify affirmative action long-run effects. We find that affirmative action targeting the bottom quintile of the income distribution is a powerful policy to reduce intergenerational persistence of earnings and improve welfare and aggregate output.
The Wrong Kind of Information
joint with Aditya Kuvalekar and Johannes Schneider
An agent decides whether to approve a project based on his information, some of which is verifiable in a court. An honest agent wants to implement projects that are likely to succeed; a dishonest agent wants to implement any project. If the project fails, the court examines the verifiable information and decides the punishment. The court seeks to deter ill-intentioned agents from implementing projects likely to fail while incentivizing the use of unverifiable information. We show how information of different kinds affects welfare. Improving the verifiable information can reduce welfare, while improving the unverifiable information always increases welfare.
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. This enables an exact characterization (at fixed discounting) of the expert’s attainable payoffs. While an ongoing relationship often helps, our characterization implies that relational incentives alone can never restore commitment power.
Work in Progress: (draft available upon request)
Fall 2013 - Spring 2016
Microeconomics for Business
Topics in Microeconomic Theory II (PhD level)
Teaching at USC Marshall
Macroeconomic Principles at NYU
Microeconomics for Business at NYU Stern
Graduate Level Microeconomics II at NYU
Graduate Level Microeconomics I and II at USP
Growth in the Developing World and the Global Economy (MBA at NYU Stern)
Intermediate Microeconomics at NYU
Intermediate Microeconomics at USP
Fall 2009 - Spring 2009
Fall 2012 - Spring 2014
Spring 2017, 2018, 2019, 2020