On the Impossibility of Protecting Risk‐takers

Risk‐neutral sellers can extract high profits from risk‐loving buyers using lotteries. To limit risk‐taking, gambling is heavily regulated in most countries. In this article, I show that protecting risk‐loving buyers is essentially impossible. Even if sellers are restricted from using mechanisms that resemble lotteries, they can still construct selling mechanisms that ensure unbounded profits as long as buyers are risk‐loving, at least asymptotically. Asymptotically risk‐loving preferences are both sufficient and necessary for unbounded profits. Buyers are asymptotically risk‐loving, for example, when they are globally risk‐loving, when they have cumulative prospect theory preferences, or when their utility is bounded from below

Calendar mechanisms

I study the dynamic mechanism design problem of a monopolist selling a fixed number of service slots to randomly arriving, short-lived buyers with heterogeneous values. The fully optimal mechanism is a non-standard auction in which bidders' payoffs are non-monotone in their opponents' bids. Because its complexity may make the fully optimal mechanism too costly to implement, I also study the optimal mechanisms in restricted classes. The most restrictive are pure calendar mechanisms, which allocate service dates instead of contingent contracts. The optimal pure calendar mechanism is characterized by the opportunity costs of service slots and is implementable with a simple mechanism

Penny auctions

This paper studies penny auctions, a novel auction format in which every bid increases the price by a small amount, but placing a bid is costly. Outcomes of real-life penny auctions are often surprising. Even when selling cash, the seller may obtain revenue that is much higher or lower than its nominal value, and losers in an auction sometimes pay much more than the winner. This paper characterizes all symmetric Markov-perfect equilibria of penny auctions and studies penny auctions’ properties. The results show that a high variance of outcomes is a natural property of the penny auction format and high revenues are inconsistent with rational risk-neutral participants

Does Wikipedia matter? : the effect of Wikipedia on tourist choices

We analyze the impact of information on Wikipedia on tourists' choices for travel destinations. Our results suggest a strong observational correlation between the amount of content on Wikipedia and tourist overnight stays. We propose a check of whether this correlation is causal. For that, we introduce randomized exogenous variation to articles' content. While our treatment is strong enough to affect content on the treated pages positively, we find no statistically significant effect of this treatment on tourist overnight stays

Optimal Sequential Contests

I study sequential contests where the efforts of earlier players may be disclosed to later players by nature or by design. The model has many applications, including rent seeking, R\&D, oligopoly, public goods provision, and tragedy of the commons. I show that information about other players' efforts increases the total effort. Thus, the total effort is maximized with full transparency and minimized with no transparency. I also show that in addition to the first-mover advantage, there is an earlier-mover advantage. Finally, I derive the limits for large contests and discuss the limit to perfectly competitive outcomes under different disclosure rules