work in progress:
Public goods through markets: do charity auctions work?
with Kenneth Chuck
[coming soon] [show abstract]
Abstract: Can firms increase their profits by donating a portion of their revenues? While a diverse range of firms commonly donate (for example, TOMS and Target), most of the theoretical studies on this topic combine impure altruism with consumers' exhibition value. We separate these two models by noticing that under warm-glow direct and indirect contributions to a public good should yield the same marginal utility. Exhibition value instead dictates higher returns from purchasing charity-linked products that can be shown-off. We show that profits can increase only in exhibition models suggesting that firms producing goods that cannot be paraded should never donate to charities. Finally, we provide conditions under which consumers donate more within a market structure than without it, conveying that market can motivate consumers to behave pro-socially.
Keywords: impure public goods, customer social responsibility, donations, market equilibrium
with Hongming Wang
[coming soon] [show abstract]
Abstract: As Medicare payment increasingly rewards value of care, empirical evidence on the effect of value-based payment is still scarce. This paper examines the incidence of quality bonus payments in the Medicare Advantage market. We find that high quality contracts increased bids by the full amount of the bonus payment, leaving enrollee premium and rebate unchanged. Within contract, premium increased (decreased) in high (low) risk counties, and the risk pool improved significantly over low quality contracts. Evidence suggests that the selection arises from a negative correlation between risk scores and patient outcome measures in the quality rating. The selection response calls into question the distributional implication of quality payments, and the risk confounds in measures of quality linked to payment.
Keywords: supply-side selection, Medicare, quality ratings, subsidies, health reform, value-based payments
with Sasha Vostroknutov and Giorgio Coricelli
[ssrn] [show abstract]
Abstract: In a stock market experiment we examine how regret avoidance influences the decision to sell an asset while its price changes over time. Participants know beforehand whether they will observe the future prices after they sell the asset or not. Without future prices participants are affected only by regret about previously observed high prices (past regret), but, when future prices are available, they also avoid regret about expected after-sale high prices (future regret). Moreover, as the relative sizes of past and future regret change, participants dynamically switch between them. This demonstrates how multiple reference points dynamically influence sales. [pdf]
Keywords: stock market behavior, behavioral finance, regret avoidance, dynamic regret, dynamic discrete choice, structural models, experiments, multiple reference points
Presentations: To be presented at George Mason University, Caltech (Applied Micro Seminar), the Econometric Society Asian and North American Meetings, the M-BEES 2017 (Maastricht), the 2017 ESA World and European Meetings, the 2017 EEA/ESEM and the 2017 IMPRS.
Suboptimal dishonesty: rationality in the absence of strategic behavior in honesty experiments
with Sean Marden, The Journal of Neuroscience, 2015 [pdf]
teaching - spring 2017:
Intermediate Microeconomic Theory (EC303), TA for Prof Giorgio Coricelli [syllabus]
Problem set 1 due on Feb 6 - Solutions posted
Problem set 2 due on Mar 22 - Solutions posted [Blackboard]
Economics Peer Tutoring Center [link]