Published & Accepted Papers
"Optimal Top-n Policy" (with Isa Hafalir and Kentaro Tomoeda) Mathematical Social Sciences (2024)
A widely adopted affirmative action policy in the university sector is the “top-n” policy, where the universities guarantee admission to students in the top n fraction of their class from every high school. The efficacy of the top-n policy in university integration has been questioned because students strategically relocate to low-achieving high schools. We show that when minorities are less likely to strategize than others, the policy can even segregate minorities from the target university, compared to the school-blind policy. A suitably chosen eligibility requirement, featuring the minimum time students must spend at a high school in order to be eligible for top-n admissions, can restore the efficacy of this policy. However, the most stringent requirement is not always optimal. The optimal requirement depends on the original distribution of students across high schools.
"Costly Information Acquisition in Centralized Matching Markets" (with Rustamdjan Hakimov and Dorothea Kübler) Quantitative Economics (2023)
When applying to university, students and their parents devote considerable time acquiring information about university programs in order to form preferences. We explore ways to reduce wasteful information acquisition, that is, to help students avoid acquiring information about out-of-reach schools or universities, using a market design approach. Focusing on markets where students are ranked by universities based on exam scores, we find that, both theoretically and experimentally, a sequential serial dictatorship mechanism leads to higher student welfare than a direct serial dictatorship mechanism. This is because the sequential mechanism informs students about which universities are willing to admit them, thereby directing their search. Our experiments also show that the sequential mechanism has behavioral advantages because subjects deviate from the optimal search strategy less frequently than under the direct mechanism. Furthermore, providing historical cutoff scores under the direct mechanism can increase student welfare, especially when the information costs are high, although the observed effect is weaker than that of a sequential mechanism.
"Commitment and Cheap Talk in Search Deterrence" (with Xin Zhao) RAND Journal of Economics (2023)
We investigate the role of sellers' commitment power in discouraging consumer search. Theoretically, lack of commitment power transforms sellers' search-deterring claims into cheap talk, eliminating sellers' ability to deter search in some market environments. However, our experiments show buyers' search decisions are significantly affected by sellers' cheap talk. When future prices are not adjustable, sellers falsely claim exploding offers to deter search. When future prices are adjustable, sellers falsely claim low future prices to lure consumers to return after search and exploit these “captive” consumers with subsequent price hikes. A behavioral model with naïve buyers explains our experimental findings.
"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.
Download: Working Paper Version (including a field study)
"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) B.E. 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.
Book Chapters
"Experiments in Market Design" 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.
Working Papers
"Priorities, Admission Chances, and Information Acquisition in School Choice" (with Georgy Artemov)
This paper focuses on students' costly search to learn about their own preferences in the context of school choice and college admission. It aims to explore interventions designed to improve learning and enhance welfare. We compare policies that endow students with full, partial, or no knowledge about their priorities in the admission process, both theoretically and experimentally. The theoretical analysis reveals that providing more knowledge about priorities does not always result in higher welfare. However, in a lab experiment, we observe that full knowledge dominates partial knowledge, which, in turn, outperforms the no-knowledge policy. This is attributed to subjects making fewer strategic mistakes when there is more clarity and certainty about priorities.
"Priorities, Admission Chances, and Information Acquisition in School Choice" (with Georgy Artemov)
This paper focuses on students' costly search to learn about their own preferences in the context of school choice and college admission. It aims to explore interventions designed to improve learning and enhance welfare. We compare policies that endow students with full, partial, or no knowledge about their priorities in the admission process, both theoretically and experimentally. The theoretical analysis reveals that providing more knowledge about priorities does not always result in higher welfare. However, in a lab experiment, we observe that full knowledge dominates partial knowledge, which, in turn, outperforms the no-knowledge policy. This is attributed to subjects making fewer strategic mistakes when there is more clarity and certainty about priorities.
Work in Progress
“Matching by Characteristics” (with Georgy Artemov and Ivan Balbuzanov)
"College Information Provision to Disadvantaged Youth" (with Gloria Chen and Alexandra de Gendre)
“Information Disclosure in Trading Networks” (with Alexandru Nichifor)