Month: March 2025

Somogyi Róbert (Department of Finance) will present “Deceptive Counterfeits and Consumer Protection” (with Johannes Johnen and Gianmarco Luu) on March 28th, 2025, at 10:30 AM, in room QA405.

Abstract:

Deceptive counterfeits—fake products that closely mimic originals in price and appearance—are a growing concern in e-commerce, posing risks to consumers and brands. Dangerous examples include fake pharmaceuticals, electronics, and car parts that can cause serious harm. This paper develops a theoretical model to examine digital platforms’ incentives to combat such fakes. We compare two enforcement strategies: prosecuting counterfeit sellers and consumer information campaigns. While seller prosecution consistently benefits consumers, information campaigns can have unintended consequences, sometimes increasing counterfeit purchases due to price adjustments by fake sellers. Our findings provide insights into the challenges of protecting consumers in digital marketplaces.

Siting (Estee) Lu (University of Edinburgh) will present “Costly Job Search with Inattentive Workers” on March 27th, 2025, at 3:00 PM (CET) via Microsoft Teams.

Join the seminar: Meeting Link

Abstract:

Labour market mismatch can arise from workers having limited attention. I propose a Generalized Partially Directed Search model, extending on existing literature by allowing inattentive workers to have diverse priors and heterogeneous attention costs. I show that mismatch can be inherited from bias in workers’ default search strategies, and heterogeneous attention costs could contribute to greater variability in the equilibrium outcomes. I also explore equilibrium multiplicity that was not adequately analyzed in previous studies. Equilibria where workers adopt different application strategies may generate both higher market efficiency and lower monopsony power than when workers employ the same application strategies. This information-theoretic approach to model job search offers new policy insights on the basis of attention.

Nour Chalhoub (Arizona State University) will present “Returns when Product Inspection is a Choice” on May 5th, 2025, at 10:30 AM (CET) via Microsoft Teams.

Join the seminar: Meeting Link

Abstract:

This paper examines a seller’s profit maximizing return policy in a setting where consumers can inspect a product before purchasing and return it if it fails to meet their expectations. The model incorporates (1) heterogeneity in customers’ taste preferences, (2) uncertainty about product valuation prior to purchase, and (3) the costs associated with inspection. My result suggests that all these three factors interact in the optimal solution: the buyer’s option to costly inspect the product compels the seller to offer a strictly positive return that changes with the degree of heterogeneity among the buyers. On the seller side, I show that the seller has a strict preference over the buyers’ inspection behavior. Furthermore, I also show that there exists a nontrivial region of parameter values for which the outcomes of the optimal menu weakly improve the outcome of the seller and the buyers as the inspection cost increases

Pinaki Mandal (Arizona State University) will present “Equivalence between Individual and Group Strategy-Proofness under Stability” on March 17th, 2025, at 4:00 PM (CET) via Microsoft Teams. Join the seminar: Meeting Link

Abstract:

When policymakers implement mechanisms in real-world institutions, they often prefer strategy-proof mechanisms over manipulable ones. For example, the Boston School Committee replaced the Boston mechanism with the student-proposing deferred acceptance algorithm in July 2005 to eliminate students’ incentives to misrepresent their preferences over schools. However, strategy-proof mechanisms are not always immune to manipulations by potential coalitions, even if these coalitions are small and easy to coordinate. This issue is mitigated under group strategy-proof mechanisms.

This paper studies group strategy-proofness in stable matching mechanisms within two-sided matching markets, where both sides of the market have strategic agents. In the context of a one-to-one matching market, we demonstrate that incorporating strategy-proofness in any stable matching mechanism not only removes the incentive for individual agents to manipulate but also eliminates the incentive for any group of agents to do so—even if the group includes agents from both sides of the market—thereby ensuring group strategy-proofness. This result holds under sufficiently varied domains. Additionally, we explore the potential extension of these findings to many-to-one matching markets.

Bea Ahumada (University of Pittsburgh) will present “Excuses and Redistribution” on March 5th, 2025, at 11:00 AM, in room QA323.

Abstract:

This study explores how, when income inequality is perceived to arise from both effort and luck, excuses (self-serving belief distortions) can influence acceptance of inequality. In a controlled laboratory setting involving a real-effort task, participants make redistribution decisions between themselves and a partner. The study varied the degree of uncertainty about the role of effort and luck in determining initial earnings endowments.

Belief elicitations indicate that increased uncertainty caused participants to be more likely to attribute their partner’s success to luck. Furthermore, the use of excuses (attributing others’ outcomes to luck) was found to reduce willingness to redistribute earnings to their partners. These findings highlight how excuses about the role of luck versus effort may contribute to the persistence of inequality even if many individuals have meritocratic principles, and how variation in the degree of uncertainty about the causes of inequality, across individuals or societies, may contribute to different degrees of biased beliefs and inequality.

The paper also provides evidence of excuses in another sense: According to a structural model of fairness views, individuals tend to adopt a fairness view—egalitarian, meritocratic, or libertarian—to justify an allocation that benefits themselves.