Venture Capital Contracting with Renegotiation

This paper examines contracting between a venture capitalist and an entrepreneur in a setting with unobservable effort when contracts are renegotiated each period. The contribution of our paper lies in the insights it provides on optimal contracts in this setting. The insights from our model prove to be significantly different in certain respects than those obtained under a multi-period contract without renegotiation or a single period setting. An example is worked out to illustrate the division of payoff between the venture capitalist and the entrepreneur each period.

All-Pay Auctions with Weakly Risk-Averse Buyers

We use perturbation analysis to study independent private-value all-pay auctions with weakly risk-averse buyers. We show that under weak risk aversion: 1) Buyers with low values bid lower and buyers with high values bid higher than they would bid in the risk neutral case. 2) Buyers with low values bid lower and buyers with high values bid higher than they would bid in a first-price auction. 3) Buyers' expected utilities in an all-pay auction are lower than in a first-price auction. 4) The seller's expected payoff in an all-pay auction may be either higher or lower than in the risk neutral case. 5) The seller's expected payoff in an all-pay auction may be either higher or lower than in a first-price auction.Private-value auctions, Risk aversion, Perturbation analysis

Bid Costs and Endogenous Bid Caps

We study contests where several privately informed agents bid for a price. All bidders bear a cost of bidding that is an increasing function of their bids, and, moreover, bids may be capped. We show that, regardless of the number of bidders, if agents have linear or concave cost functions then setting a bid cap is not profitable for a designer who wishes to maximize the average bid. On the other hand, if agents have convex cost functions (i.e. an increasing marginal cost) then affectively capping the bids is profitable for a designer facing a sufficiently large number of bidders.

Bid costs and endogenous bid caps

We study contests where several privately informed agents bid for a price. All bidders bear a cost of bidding that is an increasing function of their bids, and, moreover, bids may be capped. We show that, regardless of the number of bidders, if agents have linear or concave cost functions then setting a bid cap is not profitable for a designer who wishes to maximize the average bid. On the other hand, if agents have convex cost functions (i.e. an increasing marginal cost) then affectively capping the bids is profitable for a designer facing a sufficiently large number of bidders

The Role of Followers and Followees in the Adoption of Innovations

An online social network is a key platform through which innovation diffuses. To learn about innovativeness, we simultaneously investigate two Twitter networks, the relationships network, following-follower relationships, and the activity network, the flow of tweets. Specifically, the innovativeness relations to the networks' indegree and outdegree, the volume of platform use, and the profile's age. The more active and central the user, the earlier the adoption. Innovativeness increases with the number of followers only when at least several of them adopt the innovation. Surprisingly, having more followees is linked to later engagement with the innovation. This association is mediated by the number of adopters' followees. Those who created a Twitter profile later are also more likely to adopt innovations later. This study is novel in distinguishing between the two networks and analyzing their interactions. Its contribution lies in identifying the innovativeness of users in an online social network platform diffusion

An Innovative Influenza Vaccination Policy: Targeting Last Season's Patients

Influenza vaccination is the primary approach to prevent influenza annually. WHO/CDC recommendations prioritize vaccinations mainly on the basis of age and co-morbidities, but have never considered influenza infection history of individuals for vaccination targeting. We evaluated such influenza vaccination policies through small-world contact networks simulations. Further, to verify our findings we analyzed, independently, large-scale empirical data of influenza diagnosis from the two largest Health Maintenance Organizations in Israel, together covering more than 74% of the Israeli population. These longitudinal individual-level data include about nine million cases of influenza diagnosed over a decade. Through contact network epidemiology simulations, we found that individuals previously infected with influenza have a disproportionate probability of being highly connected within networks and transmitting to others. Therefore, we showed that prioritizing those previously infected for vaccination would be more effective than a random vaccination policy in reducing infection. The effectiveness of such a policy is robust over a range of epidemiological assumptions, including cross-reactivity between influenza strains conferring partial protection as high as 55%. Empirically, our analysis of the medical records confirms that in every age group, case definition for influenza, clinical diagnosis, and year tested, patients infected in the year prior had a substantially higher risk of becoming infected in the subsequent year. Accordingly, considering individual infection history in targeting and promoting influenza vaccination is predicted to be a highly effective supplement to the current policy. Our approach can also be generalized for other infectious disease, computer viruses, or ecological networks

Separating Equilibria in Public Auctions

We consider two private-value auctions where the prize in one is higher than the prize in the other. We show that a separating equilibrium exists in which bidders with a high valuation attend the auction with the higher prize while bidders with a low valuation attend the auction with the lower prize. In addition, we prove that a weak separating equilibrium exists where the strong bidders attend the high prize auction while the weak bidders randomize and may attend either auction, although with a higher probability of attending the low prize auction. In the set of auctions with separating equilibrium, we find the optimal minimum bids that maximize a seller's expected revenue.