I am an applied theorist interested in communication and disclosure. My research focuses on considering how firms and individuals use communication to improve their outcomes. In particular, I am interested in how individuals choose which messages to send and, in a dynamic context, when to send them. Therefore, I am interested in working on a wide range of problems that transcend the traditional field boundaries.
I have a particular interest in the economics of the media, as media firms strategically choose messages to send and information to disclose in order to gain customers, or perhaps even to shape their viewpoints for long-run gain. Another one of my specific interests is in considering how the decision of which information to disclose affects the outcome of negotiations in a competitive environment.
Online News and Editorial Standards
The internet enables a media firm to post information received from leads at any time. To examine the effect that this has on the probability of posting incorrect news, I compare a scenario in which the news can be posted and updated at any time on a continuum to a scenario in which news can only be posted at a fixed time. I determine the editorial standard, which is a cutoff that determines how certain a firm must be in order to initially post an article. When changing a story is costless, if the firm can post at any time, it will post with weakly less information than it would with a predetermined posting time. If changing a story is costly, then the firm’s editorial standard is weakly higher when it can post at any time than when there is just one posting time, and this editorial standard decreases over time. A lower editorial standard implies that the firm will be more likely to post incorrect news, so this implies that a firm may be more cautious with releasing internet news than it would be with releasing a newspaper article. However, if the firm has a strong prior about the event, it may post earlier with less information when it can post on the internet at any time.
Job applicants are often asked for their current wage, but recently implemented policies in a number of jurisdictions have prohibited this question. This policy change makes wage disclosure a strategic choice for the applicant. What effect does this policy change have on who is hired and how much they are paid? I consider a model in which an applicant applies for a job, and the employer can choose to make an offer to the applicant at a cost. I find that if the applicants do not know how much they will benefit from the job when submitting the application, then there can exist a partial disclosure equilibrium in which an applicant with a high or low wage conceals her current wage, while an applicant with an intermediate wage reveals it. This implies that the typical unravelling results common in models of voluntary disclosure may not occur. If the applicant knows this benefit in advance, there can also exist an equilibrium in which no applicant would reveal her current wage.
When to Ask for an Update: Timing in Strategic Communication
with Ying Chen, Johns Hopkins University
(Revise and Resubmit: Journal of Economic Theory)
A principal (receiver) considers whether to accept a project of uncertain value. The total value depends on the values of two aspects. In each period, an agent (sender) privately learns the value of one aspect with positive probability. We compare two reporting protocols: frequent updating and infrequent updating. Frequent updating requires the sender to report in each period; infrequent updating requires him to report only at the end of the learning process. The sender is biased towards acceptance; he may conceal his signal, but cannot misrepresent his information in other ways.
If the project’s expected value is lower than the receiver’s acceptance threshold, then the equilibrium outcome is the same regardless of the reporting protocol under certain regularity conditions. This equivalence implies that if soliciting a report is costly, then frequent updating is inefficient, but if there is gain from early resolution, then frequent updating is better. In contrast, if the project’s expected value is sufficiently high, then reporting protocol matters. Specifically, if it is sufficiently unlikely for the sender to observe an informative signal in a later period or the divergence of interests is sufficiently low, then the receiver is better off by requiring frequent updating since it encourages the sender to reveal provisionally unfavorable information early on. When the probability of the sender observing an informative signal in a later period is sufficiently high, however, the receiver is better off asking for only one report at the end of the learning process. Compared with the reporting protocols we consider, full commitment does not improve the receiver’s payoff when the expected value of the project is lower than the receiver’s acceptance threshold, but provides improvement when the expected value of the project is sufficiently high.
Research in Progress
Social Media and News Content
Social media platforms have provided a new means through which consumers can access news, potentially expanding their reach. A platform does not, however, just passively provide news, rather it has information about consumers that it can use to target them and provides its own user-generated-content as well. This paper considers a news firm that chooses the quality of a fact and opinion article, how to prioritize these articles on its website, and how the targeting algorithms of a social media firm affect these decisions. If the value to consumers of the platform’s user-generated-content is sufficiently high, then the firm will produce a lower quality fact article, and the relative quality of the opinion article would be higher. This may also lead the news firm to prioritize the opinion article over the fact article on its own website. If the value of user-generated-content is lower, the effect of the platform on the quality and order decisions is ambiguous. This analysis shows that social media targeting algorithms affect the news viewed by all consumers, even those who do not visit the platform.
Information Acquisition: A First-Order Approach
with Willy Lefez, ESMT Berlin
We consider an information-acquisition problem in an environment of imperfect information, and apply it to the information acquisition and pricing decisions of a platform. In particular, we address the question of how much costly information a firm would choose to acquire about its customers in order to determine the price to show to a given customer. We develop a novel approach of directly using first-order conditions of the firm’s optimization problem to find the optimal information acquisition strategy for the platform. This approach enables one to directly analyze the effect of a change in a platform’s profit structure or incentives on its information acquisition decision.
Student Loan Debt and Home Purchase
with Mehreen Gul, Rice University
The rapidly increasing levels of educational debt incurred by American students raises concerns over the effects that the debt could have on their ability to achieve their long-term goals, including homeownership. While amount of student loan debt held by households has increased over the last few decades, homeownership rates among young adults have declined. Additionally, if borrowers are taking out more loans to attain higher education, then higher future earnings could potentially mitigate the effect of student loan payments on home purchase. It is important to determine if the negative effect of student debt on housing demand is exceeded by the positive effect that comes from higher future earnings. The purpose of this paper is to examine the relationship between student loan debt and housing demand.