Working Papers

Information Externalities and Delay in an Investment Game (Job Market Paper)

Abstract: This paper studies, both theoretically and experimentally, a model of social learning with endogenous timing and two signal qualities. Two agents decide whether to make an irreversible investment. Each agent receives a private signal, either strong or weak, correlated with the investment return. Waiting discounts profits in case one decides to invest; however, it reveals the investment decision of the other agent. I solve for pure-strategy equilibria featuring information externalities and delay. The predictions of these equilibria are then tested in the laboratory. There is support for the theory in the data but I also find some departures from the point predictions. These departures are in the form of (i) investment in the initial period when delay is optimal, and (ii) a lack of investment following investment by the other participant. Tolerance for risk and randomization, when faced with complex reasoning tasks, can explain these behavioral findings.


Reputation with Imperfect Observation of Outcomes

Abstract: Consumers' access to information about a seller's past performance has improved tremendously in recent years in large part due to the internet. This paper looks at the effect of this increased consumer observation on a seller's reputation incentives. If consumers perfectly observe all information about the seller's past performance, the seller could exploit a good reputation by shirking and exerting an inefficient amount of effort unless the cost of (high) effort is sufficiently low. On the other hand, imperfect observation could keep the seller's reputation incentives intact by allowing the possibility that future consumers observe only the current period performance. I study two different signal structures and examine when more information could reduce welfare.


Work in Progress

Reputation and Search