"Information Design in Cheap Talk" (with Qianjun Lyu)
Abstract. An uninformed sender publicly commits to an informative experiment about an uncertain state, privately observes its outcome, and sends a cheap-talk message to a receiver. We provide an algorithm valid for arbitrary state-dependent preferences that will determine the sender’s optimal experiment, and give sufficient conditions for information design to be valuable or not under different payoff structures. These conditions depend more on marginal incentives—how payoffs vary with the state—than on the alignment of sender’s and receiver’s rankings over actions within a state.
- "Competition for Attention and News Quality" (with Heng Chen)
Forthcoming: American Economic Journal: Microeconomics
Over the past decades, the number of news outlets has increased dramatically but the quality of news products has declined. We propose a model to reconcile these facts, where consumers' attention allocation decisions not only depend on but also affect news outlets' quality choices. When competition is intensified by new entries, the informativeness of the news industry rises. Thus, attention is diverted from existing outlets, reducing their incentives to improve news quality, which begets a downward spiral. Furthermore, when attention becomes cheaper, a larger number of news outlets can be accommodated in equilibrium, but news quality still falls.
"Gaming a Selective Admissions System" (with Frances Xu Lee)
Forthcoming: International Economic Review
Abstract. A university uses both early-stage selection outcome (high school affiliation) and late-stage admission test outcome (standardized test scores) to select students. We use this model to study policies that have been proposed to combat inefficient gaming in college admissions. Increasing university enrollment size can exacerbate gaming and worsen the selection outcome. Abolishing standardized tests for university admissions increases gaming targeting high school admissions and worsens the selection outcome, while eliminating high-school ability sorting may improve the university selection outcome under some cost conditions of gaming. Committing to a lower-powered selection scheme can improve the selection outcome by reducing gaming behaviors.
"Individual and Collective Information Acquisition: An Experimental Study" (with Pellumb Reshidi, Alessandro Lizzeri, Leeat Yariv, and Jimmy Chan)
Many committees—juries, political task forces, etc.—spend time gathering costly information before reaching a decision. We report results from lab experiments focused on such information-collection processes. We consider decisions governed by individuals and groups and compare how voting rules affect outcomes. We also contrast static information collection, as in classical hypothesis testing, with dynamic collection, as in sequential hypothesis testing. Several insights emerge. Static information collection is excessive, and sequential information collection is non-stationary, producing declining decision accuracies over time. Furthermore, groups using majority rule yield especially hasty and inaccurate decisions. Nonetheless, sequential information collection is welfare enhancing relative to static collection, particularly when unanimous rules are used.
"Signaling under Double-Crossing Preferences: The Case of Discrete Types" (with Chia-Hui Chen and Junichiro Ishida)
The class of double-crossing preferences, where signaling is cheaper for higher types than for lower types at low signaling levels and the opposite is true at high signaling levels, underlines the phenomenon of countersignaling. We show that under the D1 refinement, the equilibrium signaling action must be quasi-concave in type and generally exhibits pooling, with intermediate types choosing higher actions than higher and lower types. We provide an algorithm to systematically construct an equilibrium and use this algorithm to establish its existence for this general class of preferences with an arbitrary discrete-type distribution.
Voting in Large Elections" (with
Ettore Damiano and Li Hao)
Abstract. Recounting introduces multiple pivotal events in two-candidate elections. In addition to determining which candidate is elected, an individual's vote is pivotal when the vote margin is just at the levels that would trigger a recount. In large elections, the motive to avoid recount cost can become the dominant consideration for rational voters, inducing them to vote informatively according to their private signals. In environments where elections without recount fail to aggregate information efficiently, a modified election rule with small recount cost can produce asymptotically efficient outcomes in the best equilibrium, with a vanishingly small probability of actually invoking a recount. In environments where efficient information aggregation obtains in elections without recount, introducing recount can reduce the size of the electorate needed for the equilibrium outcome to converge to an information efficient outcome.