Publications & Forthcoming Papers
"The Instability of Matching with Overconfident Agents" Games and Economic Behavior (2019)
Many centralized college admissions markets allocate seats to students based on their performance on a single standardized exam. The exam's measurement error can cause the exam-derived priorities to deviate from colleges' aptitude-based preferences. Previous literature proposes to combine pre-exam preference submission with a Boston algorithm (a PreExam-BOS mechanism). This paper examines the proposed mechanism in an experiment where students are not fully informed of their relative aptitudes. The results show that pre-exam preference submission is distorted by overconfidence and that PreExam-BOS fails to achieve stable matching with respect to aptitudes. Compared to a post-score Serial Dictatorship mechanism, which is robust to overconfidence but more prone to the exam's measurement error, PreExam-BOS creates more mismatches and a greater variance in the extent of mismatches: some students receive a large advantage while others are hurt considerably. Moreover, in the experimental data PreExam-BOS rewards overconfidence and punishes underconfidence. The observed overconfidence cannot be mitigated with an improved information condition.
"Exploding Offers and Unraveling in Two-Sided Matching Markets" International Journal of Game Theory (2018)
Many two-sided matching markets tend to unravel in time with transactions becoming inefficiently early. In a two-period decentralized model, this paper shows that when a market culture allows firms to make exploding offers, unraveling is more likely to occur and lead to a less socially desirable matching outcome. A market with a larger uncertainty in early stages is not necessarily more vulnerable to the presence of exploding offers: it depends on the specific information structure. A market tends to be less vulnerable to exploding offers when there is an excess supply of labor. While a banning policy on exploding offers tends to be supported by high quality firms and workers, it can be opposed by those of low qualities. This explains the prevalence of exploding offers in practice.
Download: Working Paper Version
"Targeted Advertising on Competing Platforms" (with Qiang Gong and Huanxing Yang) The BE Journal of Theoretical Economics (2018)
This paper studies targeted advertising in two-sided markets. Each of the two competing platforms has single-homing consumers on one side and multi-homing advertising firms on the other. We focus on how asymmetry in platforms’ targeting abilities translates into asymmetric equilibrium outcomes, and how changes in targeting ability affect the price and volume of ads, consumer welfare, and advertising firms' profits. We also compare social incentives and equilibrium incentives in investing in targeting ability.
"Experiments in Market Design" forthcoming in C. Monica Capra, Rachel Croson, Mary Rigdon and Tanya Rosenblat (eds), Handbook of Experimental Game Theory, Cheltenham, UK and Northampton, MA, USA: Edward Elgar Publishing.
"Commitment and Cheap Talk in Search Deterrence" (with Xin Zhao) Submitted
We experimentally investigate the role of commitment in search deterrence. Depending on market environments, sellers discourage search with early-transaction discounts or with exploding offers. Consistent with the theory, removing sellers' abilities both to commit and to communicate via cheap talk renders search deterrence ineffective in markets with exploding offers but leaves those with early-transaction discounts unaffected. Cheap talk is mostly used to deter search in the exploding-offer environment but to encourage return after search in the early-transaction-discount environment. We show that these different cheap-talk strategies can be explained by introducing naive buyers but not honest sellers into the standard model.
Work in Progress
"Preference Formation in College Admissions" (with Rustamdjan Hakimov and Dorothea Kuebler)
"To Return or Not: College Admissions of Migrant Students" (with Isa Hafalir and Kentaro Tomoeda)
"Constrained School Choice and Information Acquisition"