A Brief Summary of my research

Publications

Information gathering and marketing (with Guillermo Caruana and Vicente Cuñat), Journal of Economics and Management Strategy, forthcoming

Interrogation Methods and Terror Networks (with Mariagiovanna Baccara) (2009) Mathematical Methods in Counterterrorism eds N. Memon, J. D. Farley, D. L Hicks, and T. Rosenorn, Springer,  271-290.

Breadth, Depth, and Competition, Economics Letters, (May 2009), Volume 103(2), 110-112,

How to organize crime (with Mariagiovanna Baccara) Review of Economic Studies, 2008, Volume 75(4), 1039–1067.

Recruitment, training, and career concerns (with Juanjo Ganuza) Journal of Economics and Management Strategy, 2008, Volume 17 (4). 839-864.

Seller Reputation (with Steve Tadelis), Foundations and Trends in Microeconomics, 2008, Volume 4:4, 273-351.

Something to prove: Reputation in teams RAND Journal of Economics, (Summer 2007), Volume 38(2), 495-511.

Imperfect Competition and Reputational Commitment, Economics Letters, (November 2005), Volume 89(2), 167-173.

Reputation and Survival: learning in a dynamic signalling model, Review of Economic Studies, (April 2003), Volume 70(2), 231-251.

Working Papers

Long-term debt and hidden borrowing (with Vicente Cuñat)

Information gathering externalities in product markets (with Guillermo Caruana and Vicente Cuñat)

Work in Progress

Information and Human Capital Management (with Ian Jewitt and Clare Leaver)

Search, Design, and Market Structure (with Guillermo Caruana and Vicente Cuñat)

Transparency, Career Concerns, and Incentives for Acquiring Expertise

Work that might progress

Campaigns with Coarse Cognition

Reputation and Specialization (with Johannes Hörner).

Obsolete

A literature review: A review of an idiosyncratic selection of literature loosely related to interactions between individual and collective reputations

My PhD Thesis, Reputation and professional services: survival, teams and incentives, contains antecedents and some extensions of a few of my papers).

Abstracts

Information gathering and marketing (with Guillermo Caruana and Vicente Cuñat), Journal of Economics and Management Strategy, forthcoming.
Consumers have only partial knowledge before making a purchase decision but can choose to acquire more detailed information. A firm can make it easier or harder for consumers to obtain information. We explore consumers’ information gathering and the firm’s integrated strategies for marketing, pricing and investment in quality. There are two key effects. First, a trade-off between targeting a broad, but ill-informed, audience and catering to a well-interested niche. Second, when the firm cannot commit to its investment in quality, the firm pricing and marketing policy needs to induce some consumers to actively gather information about product characteristics to convince all consumers that it has invested in product quality.

Breadth, Depth, and Competition, Economics Letters, (May 2009), Volume 103(2), 110-112.
We consider the trade-offs in the choice between depth (a narrow high quality position) and breadth (a wide low quality range). In particular, the extent of depth or breadth in a market can be non-monotonic in the strength of competition.

How to Organize Crime (with Mariagiovanna Baccara), Review of Economic Studies, 2008, Volume 75(4), 1039-67.
This paper won a Young Economist Award, European Economics Association, 2005
In criminal organizations, diffusing information widely throughout the organization might lead to greater internal efficiency (in particular, since these organizations are self-sustaining, through facilitating cooperation). However, this may come at a cost of leaving the organization more vulnerable to external threats such as law enforcement. We consider the implications of this trade-off and we characterize the optimal information structure, rationalizing both hierarchical and cell-based forms. Then, we focus on the role of the external authority, characterize optimal detection strategies and discuss the implications of different forms of enforcement on the internal structure of the organization. Finally, we discuss a number of applications and extensions.

Recruitment, Training and Career Concerns (with Juanjo Ganuza), Journal of Economics and Management Strategy, 2008, Volume 17 (4). 839-864. (Computational Model)
We examine training and recruitment policies in a two-period model that nests two forms of production, "routine" work where ability and effort are substitutes and "creative" work where they are complements. Alternative ways of improving average ability have opposite implications for agents’ career concerns. While teaching to the top (training complementary to ability) or identifying star performers increases agents’ career concerns, teaching to the bottom has the opposite effect. The paper also makes more general comments relating to models of reputation.

Seller Reputation (with Steve Tadelis), Foundations and Trends in Microeconomics, 2008, Volume 4:4, 273-351.
Seller reputation is an important asset because buyers often choose sellers on the basis of their reputation. This is particularly true when the quality of the good or service transacted are hard to measure and the parties cannot perfectly contract on the outcome of the transaction. As a consequence, the seller will be mindful of building and maintaining a good reputation through the information that buyers have about the seller, including previous transactions and the reports of other buyers.
We introduce a unifying framework that embeds a number of different approaches to seller reputation, incorporating both hidden information and hidden action. We use this framework to stress that the way in which consumers learn affects both behavior and outcomes. In particular, the extent to which information is generated and socially aggregated determines the efficiency of markets.
After reviewing these theoretical building blocks we discuss several applications and empirical concerns. We highlight that the environment in which a transaction is embedded can help determine whether the transaction will occur and how parties will behave. Institutions, ranging from the design of online markets to norms in a community, can be understood as ensuring that concerns for reputation lead to more efficient outcomes. Similarly, the desire to affect consumer beliefs regarding the firm’s incentives can help us understand strategic firm decisions that seem unrelated to the particular transactions they wish to promote.
We conclude by considering slightly different models of reputation that lie beyond the scope our framework, briefly reviewing the somewhat sparse empirical literature and highlighting and suggesting future directions for research.

Something to prove: Reputational incentives in teams, RAND Journal of Economics, (Summer 2007), Volume 38(2), 495-511.
Agents work for their own reputations when young but for their firms when old. An individual with an established reputation cannot credibly commit to exerting effort when working alone. However, by hiring and working with juniors of uncertain reputation, seniors will have incentives to exert effort. Incentives for young agents arise from a concern for their own reputation (and the opportunity to take over the firm) but older agents work for the reputation of their firms (and the opportunity to sell out to juniors). An important theoretical contribution is an example of a mechanism that endogenously introduces type uncertainty.

Imperfect Competition and Commitment, Economics Letters, (November 2005), Volume 89(2), 167-173
Competition can both aid and hinder reputational commitments for quality. These are self-sustaining depending on future profits after maintaining or deviating from the commitment, and on current costs of sustaining it. Competition can affect these three elements at different rates.

Reputation and Survival: learning in a dynamic signalling model, Review of Economic Studies, (April 2003), Volume 70(2), 231-251.
We consider the impact of reputation on the survival of a monopolist selling single units in discrete time periods, whose quality is learned slowly. If the seller learns her own quality at the same rate as customers, a sufficiently bad run of luck could induce her to stop selling. When she knows her quality, a good seller never stops selling though at low reputations a bad seller does with some probability. Furthermore, a seller with positive, though imperfect, information sells for the same number of periods whether her information is private or public. We further consider the robustness of the central result when the seller’s opportunities for strategic behaviour are limited. An earlier version is available as as Self-Confidence and Survival, STICERD Theoretical Economics DP 428 or in my thesis. In addition to a better title, the chief difference with respect to the published version is a finite period version of the model that allows the firm to choose equilibrium prices. The equilibrium might see the firm choose a low price (that is below the consumers willingness to pay) when its reputation is bad. The intuition here is that making life tough in bad states is worse for a bad seller than a good one and so flushes out bad sellers quickly allowing the good to capture higher value.

Long-term debt and hidden borrowing (with Vicente Cuñat)
This paper won the Best Corporate Finance paper in the Annual Spanish Finance Association Meeting 2005
We consider borrowers with the opportunity to raise funds from a competitive banking sector that shares information about borrowers, and an alternative hidden lender. We highlight that the presence of the hidden lender restricts the contracts that can be obtained from the banking sector and that in equilibrium some borrowers obtain funds from both the banking sector and the (inefficient) hidden lender simultaneously. We further show that as the inefficiency of the hidden lender increases, total welfare decreases. By extending the model to examine a partially hidden lender, we further highlight the key role of information.

Information gathering externalities in product markets (with Guillermo Caruana and Vicente Cuñat)
Goods and services vary along a number of dimensions independently. Customers can choose to acquire information to assess the quality of some dimensions and not others. Their aggregate choices affect firms' incentives to invest in quality. But given that each consumer does not consider her individual effect, there are indirect externalities in information gathering. Therefore, a fall in the cost of acquiring information, by changing the pattern of consumers' information gathering and thereby firm investment, can paradoxically reduce consumer surplus, profits, and welfare. We introduce a number of extensions and in particular highlight a benefit of diversity in tastes.

Information and Human Capital Management (with Ian Jewitt and Clare Leaver)
An increasingly important organisational design problem for many firms is to recoup general human capital rents while maintaining attractive career prospects for workers. We explore the role of information management in this context. In our model, an information management policy determines the statistic of worker performance that will be available to outside recruiters. Choosing different statistics affects the extent of regression to the mean which, we show, in turn affects the incidence of adverse selection among retained and released workers. Using this observation, we detail how optimal information management policies vary across firms with different human capital management priorities. This view of human capital management via information management has strong implications for labour market outcomes. We discuss the impact on average wages, wage inequality, wage skewness and labour turnover rates.

Search, Design, and Market Structure (Guillermo Caruana and Vicente Cuñat)
The Internet is said to have made consumer search much easier with consequences for competition, industry structure and product offerings. We explore these conse quences in a rich but tractable model that allows for strategic design choices. We find a polarized market structure, where some firms choose standard designs aiming for broad-based audiences, while others target narrow niches. Such an industry structure can arise even when all firms and consumers are ex-ante identical. We perform comparative statics and show the effect of a fall in search costs on the designs, market shares, prices, and profits of different firms. In particular, a fall in search costs can lead to higher industry prices and profits. In characterizing sales distributions, our analysis is related to discussions of how the Internet has led to the prevalence of niche goods and the long tail and superstar phenomena.

Transparency, Career Concerns, and Incentives for Acquiring Expertise
An agent can exert effort to improve the quality of a signal (that also depends on his ability). The signal will help him to choose an action, which in turn leads to some observable good or bad outcome. Transparency on actions can distort actions towards "smart" actions (which a more able agent is more likely to receive) regardless of the signal. When smart actions conceal any further information, this dampens incentives for effort. In contrast revealing smart actions can boost effort and so could raise overall efficiency, providing a more nuanced view on costs and benefits of transparency and delegation. Further, the model brings together two approaches to career concerns--the ability- and expertise-based approaches and highlights that the two can act in concert or in opposition.

Campaigns with Coarse Cognition
When a receiver of information processes that information coarsely then the order in which he receives information affects his terminal beliefs. If follows that there is scope for senders of information to be strategic in timing a campaign. We highlight a number of effects. In particular, when senders compete, two motivations pull in opposite directions: First a sender will seek to send information early to make the receiver less receptive to information from her rival; but, secondly, a sender will also benefit from having the last word. These effects are illustrated in relatively simple examples which admit unique equilibria and where comparative statics and the effects of asymmetries between the senders (in terms of starting positions, or in the number of messages to send) can be addressed. In particular, they are suggestive of a pattern of campaigns where rivals race to establish lead, then when a clear lead emerges campaigns die down before a flurry of activity at the end of a campaign. Alternative approaches, and how these might be empirically distinguished, are also discussed.