Essays on information economics and game theory

This dissertation consists of four chapters on the topic of information economics and game theory. I investigate Bayesian inference and persuasion restricted by a bureaucratic norm, strategic experimentation amidst private information, multiple-buyer bargaining influenced by concave utility, and cheap talk in contexts involving naïve players. By leveraging rigorous theoretical models, I aim to uncover the underlying mechanics of strategic interactions and the pivotal role of information dissemination in diverse economic contexts. Chapter 1 looks at an information design problem. In this model, a developer seeks to persuade a welfare-maximizing bureaucrat to award a contract to her. The official has a short tenure, and his successor's decisions are subject to a bureaucratic norm: an official's decision must be based on evidence that is either recorded by his predecessor or presented to him. Thus, Bayesian inference is restricted when the first official fails to record evidence. The first official can exploit this and induce the developer to conduct more informative experiments. I focus on parameter values where the static values of persuasion are zero to the bureaucracy and strictly positive for the developer. I show that there are two possibilities in the dynamic game. Either the developer conducts a more informative experiment and the official decides immediately, so that social welfare is greater. Or there is delay, where the cost of delay to the bureaucracy offsets the benefits of a more informed decision. In either case, the developer is worse off compared to static persuasion. With unrestricted inference, there exists an intuitive PBE that replicates the static outcome, so that the bureaucratic norm may increase social welfare and never reduces it. Chapter 2 studies a symmetric two-player game of strategic experimentation where both players have private information. I find that two-sided private information improves welfare, both at the ex ante and interim stages, by mitigating the free-rider problem. Furthermore, in some states of the world, there may be over-experimentation, i.e., players may experiment more than the social planner would under complete information. Chapter 3 is joint work with David Sibley. This chapter looks at a situation where s seller bargains with two buyers to make a deal with each of them, using an alternating-offer protocol (“AO”). The bargaining begins with one buyer, with the second entering at a future date. The seller has a concave utility function defined over total payments from buyers, so the two bargains affect each other. When the seller’s utility function exhibits decreasing absolute risk aversion, a higher price in the first bargain increases the price in the subsequent bargain. Even if two players are identical except for the arrival date, they will make different payments to the seller. The shape of the utility function and the arrival date determine whether there is a first or second-mover advantage. Although agreements in our model are reached on different dates, the usual limit payoffs for AO do not approach those of the sequential Nash bargaining solution. Finally, we extend the model to a vertical market, in which an upstream seller supplies downstream buyers with critical input. These buyers compete with each other in the downstream market. We find that, even if the buyers are symmetric Cournot competitors, the equilibrium of the model is asymmetric, with one buyer paying more than the other. With some utility functions of the seller, prior to entry by the second firm, the price set by the incumbent can decrease with the increased expected entry dates. Standard vertical models would not predict this. Chapter 4 endogenizes the probability of the receiver blindly believing in the sender by allowing the sender to increase this naivety probability at a cost, based on the cheap talk model with naive receivers who take the message at face value in Ottaviani and Squintani (2006). When the probability chosen is observed by receivers, receivers can benefit from this ability of the sender, and a fully revealing equilibrium is possible. But this ability of the sender damages information transmission and removes the fully revealing equilibrium if the probability is not observable. These results can explain how information is conveyed in advertising when the advertiser can design the content of advertising as well as use extra expenditure to affect the consumers' gullibility.Economic

Mitigating Backdoors in Federated Learning with FLD

Federated learning allows clients to collaboratively train a global model without uploading raw data for privacy preservation. This feature, i.e., the inability to review participants' datasets, has recently been found responsible for federated learning's vulnerability in the face of backdoor attacks. Existing defense methods fall short from two perspectives: 1) they consider only very specific and limited attacker models and unable to cope with advanced backdoor attacks, such as distributed backdoor attacks, which break down the global trigger into multiple distributed triggers. 2) they conduct detection based on model granularity thus the performance gets impacted by the model dimension. To address these challenges, we propose Federated Layer Detection (FLD), a novel model filtering approach for effectively defending against backdoor attacks. FLD examines the models based on layer granularity to capture the complete model details and effectively detect potential backdoor models regardless of model dimension. We provide theoretical analysis and proof for the convergence of FLD. Extensive experiments demonstrate that FLD effectively mitigates state-of-the-art backdoor attacks with negligible impact on the accuracy of the primary task

Nighttime Smartphone Reflective Flare Removal Using Optical Center Symmetry Prior

Reflective flare is a phenomenon that occurs when light reflects inside lenses, causing bright spots or a "ghosting effect" in photos, which can impact their quality. Eliminating reflective flare is highly desirable but challenging. Many existing methods rely on manually designed features to detect these bright spots, but they often fail to identify reflective flares created by various types of light and may even mistakenly remove the light sources in scenarios with multiple light sources. To address these challenges, we propose an optical center symmetry prior, which suggests that the reflective flare and light source are always symmetrical around the lens's optical center. This prior helps to locate the reflective flare's proposal region more accurately and can be applied to most smartphone cameras. Building on this prior, we create the first reflective flare removal dataset called BracketFlare, which contains diverse and realistic reflective flare patterns. We use continuous bracketing to capture the reflective flare pattern in the underexposed image and combine it with a normally exposed image to synthesize a pair of flare-corrupted and flare-free images. With the dataset, neural networks can be trained to remove the reflective flares effectively. Extensive experiments demonstrate the effectiveness of our method on both synthetic and real-world datasets.Comment: CVPR2023 (Highlight

Southward key pathways of radioactive materials from the Fukushima Daiichi Nuclear Power Plant

This study examines the interannual and seasonal variations in the distribution of radioactive materials released from the Fukushima Daiichi Nuclear Power Plant (FDNPP) accident in the surface layer of the Kuroshio Extension (KE). Focusing on the contrasting flow conditions in 2015 (southward) and 2021 (northward) – significant oscillatory phases of the KE’s mean flow axis – the research analyzes the impact of seasonal variations on particle transport pathways. The findings reveal distinct seasonal patterns: summer releases primarily follow the eastward KE movement, while winter releases exhibit a southward trajectory. The study further quantifies the transport timescales, demonstrating that particles can reach the Luzon Strait within 10 months, subsequently diverging northward along the Kuroshio and northwestward along the Kuroshio Branch Current, potentially entering the South China Sea within 13 months. This research contributes valuable insights into the seasonal dynamics governing the dispersion and transport of Fukushima-derived radioisotopes in the surface ocean, highlighting the crucial role of the KE in influencing their trajectories