A rational principal delegates learning to an overconfident agent who overestimates the precision of the information he collects. The principal chooses between two contracts: commitment, in which the agent commits to the duration of learning in advance, and flexible, in which the agent decides when to stop learning in real time. When the agent is sufficiently overconfident, the principal optimally ties the agent's hands by offering him the commitment contract. When the principal can choose both the contract and the agent's level of overconfidence, selecting the rational agent is suboptimal when the cost of learning is sufficiently high.

All versions

An agent learns in continuous time from two information sources, each associated with a hypothesis. If a hypothesis is true, the associated source confirms it at a positive rate. False hypotheses are never confirmed. Among the two hypotheses, either exactly one is true or both are false. The agent’s optimal learning strategy has two phases. During the first phase, the agent follows his beliefs; that is, at each moment, he learns from the source associated with the most likely hypothesis according to his current beliefs. During the second phase, he focuses on excluding the least likely but more important hypothesis.

ICEF Working Paper WP9/2019/05   All versions

A hider publicly commits to the number of seekers and then privately gets involved in a story, which may be compromising. Each seeker aims to be the first to learn and report a compromising story. The seekers learn the story privately and in continuous time. With more seekers, the hider's story gets revealed at a faster rate, but each seeker gets discouraged and ceases learning more quickly. To reduce the probability of a compromising report, the hider may optimally choose infinitely many seekers. Nevertheless, the hider unambiguously benefits from making it harder for each seeker to learn her story.

All versions

Two agents announce the state they consider most likely infinitely many times. A small departure from common belief in rationality can have a severe impact on the belief about the state and on the behavior of an extremist: while initial periods of disagreement produce a temporary convergence of beliefs, prolonged disagreement induces reversion towards the initial belief. The mechanism is simple: the longer the counterpart insists on the opposite view, the more the extremist doubts that the counterpart is intellectually capable and honest, and therefore the more he discounts the counterpart's opinion.

supersedes Disagreement Under Almost Common Knowledge of Rationality     ICEF Working Paper WP9/2020/01     All versions

We study optimal diversity (in expertise) in hiring decisions. The key trade-off is that, while hiring a more diverse team enlarges the team's pool of knowledge, it may also discourage communication between the hired experts. Equilibrium diversity balances this trade-off. We find that a gradual reduction in communication costs can lower diversity, but a big reduction in communication costs will eventually foster diversity.

A merger of two companies active in seemingly unrelated markets creates data linkage: by operating in a product market, the merged company acquires an informational advantage in an insurance market where companies compete in menus of contracts. In the insurance market, the informed insurer earns rent through cream-skimming. Some of this rent is passed on to consumers in the product market. Overall, the data linkage makes consumers better off when the insurance market is competitive and, under some conditions, even when the insurance market is monopolistic. The role of competitiveness of the product market and the data-sharing requirement are discussed.

We study the effect of a merger on R&D activity in a dynamic model in which there is uncertainty about the feasibility of innovation. The merger has three effects on innovation. Once an innovation has already taken place, the merger may reduce the number of follow-up innovations (cannibalization effect). At the same time, the merger may increase the probability of the first game-changer innovation (appropriability effect) and bring this innovation forward in time (informational effect). A surprising policy implication of our model is that the benefit of the merger may be higher if the first and subsequent innovations are closer substitutes.

We investigate how optimal cognitive diversity depends on the nature of production and the objective employed. When the output of the most productive worker becomes relatively more important, with a utilitarian objective, optimal diversity weakly increases. However, with a Rawlsian objective, which captures the preferences of a public service provider, a regulated firm, or a very risk averse manager, optimal diversity might decrease. Moreover, optimal diversity is weakly higher with the Rawlsian objective than with the utilitarian one, which suggests that high diversity in teams can be achieved by imposing a minimal satisfactory service requirement rather than micromanaging diversity directly.

Knowledge Transfers   joint with Doruk Cetemen, Chiara Margaria and Arina Nikandrova 

Dynamic Covenant Violations   joint with Andrew Bird, Stephen Karolyi and Thomas Ruchti

Ordering Data to Persuade   joint with Steven Kivinen and Arina Nikandrova 

The Effect of Correlation and Payoff Interdependence on R&D   joint with Arina Nikandrova 

• 18 March 2024

University of Essex, UK

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

presented by Arina Nikandrova

• 9 February 2024

The 41st Australasian Economic Theory Workshop (AETW2024) (University of Melbourne, Australia)

Diversity in Teams slides

presented by Vladimir Smirnov

• 11 January 2024

The 2023 International Conference on Public Economic Theory (PET 2023) (Santiago, Chile)

The Effect of Mergers on Innovations slides

• 9 January 2024

The 23rd Annual Society for the Advancement of Economic Theory (SAET) Conference (Santiago, Chile)

The Effect of State Correlation and Payoff Interdependence on R&D slides

• 16 December 2023

Asia-Pacific Industrial Organization Conference (APIOC) 2023 (Hong Kong University of Science and Technology)

Diversity in Teams slides

presented by Andrew Wait

• 4 December 2023

Game Theory Seminar, University of Graz, Austria

Ordering Data to Persuade

presented by Steven Kivinen

• 1 December 2023

Second Workshop in Information Economics (HSE University, Moscow)

The Effect of Mergers on Innovations slides

• 23 November 2023

University of Warwick, UK

The Effect of Mergers on Innovations slides

presented by Arina Nikandrova

• 20 November 2023

The 93rd Annual Meeting of the Southern Economic Association — SEA conference, session 3.A.03 Theory: Information V (New Orleans, LA, US)

Does Reducing Communication Barriers Promote Diversity? slides

presented by Miaomiao Dong

• 8 November 2023

New Zealand Microeconomics Study Group Meeting (University of Otago, New Zealand)

Diversity in Teams slides

presented by Vladimir Smirnov

• 8 November 2023

Bonn Graduate School of Economics (BGSE) lunch workshop (Germany)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

presented by Claudia Herresthal

• 8 November 2023

Specialist Seminar at the University of Edinburgh, UK

Does Reducing Communication Barriers Promote Diversity? slides

• 7 November 2023

Microtheory Seminar Series at Adam Smith Business School, University of Glasgow, UK

Does Reducing Communication Barriers Promote Diversity? slides

• 7 November 2023

CMA Durham Workshop (Durham University Business School, UK)

The Effect of Mergers on Innovations slides

presented by Arina Nikandrova

• 3 November 2023

The 9th Lancaster Game Theory Conference (Lancaster University, UK)

Diversity in Teams slides

• 1 November 2023

University of Leicester Business School, UK

Does Reducing Communication Barriers Promote Diversity? slides

• 31 October 2023

University of London, City, UK

Does Reducing Communication Barriers Promote Diversity? slides

• 20 October 2023

The 12th CRC Retreat – Bonn-Mannheim Workshop (Germany)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

presented by Claudia Herresthal

• 20 September 2023

International Laboratory of Game Theory and Decision Making, HSE University, Saint Petersburg, Russia

The Effect of Mergers on Innovations slides

• 13 September 2023

Pennsylvania State University, PA, US

The Effect of Mergers on Innovations slides

presented by Arina Nikandrova

• 11 September 2023

Johns Hopkins University, Baltimore, MD, US

The Effect of Mergers on Innovations slides

presented by Arina Nikandrova

• 8 September 2023

Social and Political Economy Conference Series: Data, Markets, and Privacy (Johns Hopkins University, Baltimore, MD, US)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

presented by Arina Nikandrova

• 18 July 2023

The 22nd Annual Society for the Advancement of Economic Theory (SAET) Conference (Paris, France)

Knowledge Transfers slides

presented by Arina Nikandrova

• 17 July 2023

The 22nd Annual Society for the Advancement of Economic Theory (SAET) Conference (Paris, France)

Diversity in Teams slides

• 6 July 2023

Centre for Research in Behavioural Science (CRIBS) Workshop (University of Nottingham, UK)

The Effect of Mergers on Innovation slides

presented by Kaustav Das

• 20 June 2023

NERA

The Effect of Mergers on Innovation slides

presented by Arina Nikandrova

• 9 June 2023

Workshop on Competition and Regulation in Digital Markets (UL City, UK)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

presented by Arina Nikandrova

• 1 June 2023

Second FES-ICEF-NES Workshop in Microeconomic Theory (HSE University, Moscow)

Diversity in Teams slides

• 14 April 2023

XXIV Yasin (April) International Academic Conference on Economic and Social Development (HSE University, Moscow)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

• 6 December 2022

Second Workshop on Contracts, Incentives and Information (CEPR event; Collegio Carlo Alberto, Turin, Italy)

Imposing Commitment to Rein in Overconfidence in Learning slides

presented by Arina Nikandrova

• 5 December 2022

NES30 Academic Conference in Memory of Gur Ofer (online)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

• 4 November 2022

The 8th Lancaster Game Theory Conference (Lancaster University, UK)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

presented by Arina Nikandrova

• 21 October 2022

Workshop in Information Economics in Higher School of Economics (Moscow)

Data Linkage between Markets: Does the Emergence of an Informed Insurer Cause Consumer Harm? slides

• 16 July 2022

The 21th Annual Society for the Advancement of Economic Theory (SAET) Conference (Australian National University, Canberra, Australia, Online)

Does Reducing Communication Barriers Promote Diversity? slides

• 16 July 2022

The 21th Annual Society for the Advancement of Economic Theory (SAET) Conference (Australian National University, Canberra, Australia, Online)

The Effect of Data-Driven Mergers on Insurance Markets slides

presented by Arina Nikandrova

• 10 June 2022

Conference in Birkbeck, University of London

The Effect of Data-Driven Mergers on Insurance Markets slides

presented by Arina Nikandrova

• 8 June 2022

Economic Theory Workshop (City, University of London)

The Dark Side of Transparency: When Hiding in Plain Sight Works slides

presented by Arina Nikandrova 

• 18 May 2022

Micro Theory Workshop (HSE Moscow, Online)

The Effect of Data-Driven Mergers on Insurance Markets slides

• 8 April 2022

Pennsylvania Economic Theory Conference (PETCO) (PennState University, PA, US)

Diversity and Communication slides

presented by Miaomiao Dong

• 28 March 2022

Digital Economy Network Workshop (University of East Anglia, Norwich, UK, Online)

The Effect of Data-Driven Mergers on Insurance Markets slides

presented by Arina Nikandrova

• 23 February 2022

PennState Theory Workshop

Diversity and Communication slides

presented by Miaomiao Dong

• 4 December 2021

The 8th Annual Economic Theory Conference (Arizona State University, AZ, US)

Diversity and Communication slides

presented by Miaomiao Dong

• 27 October 2021

City, University of London

Imposing Commitment to Rein in Overconfidence in Learning slides

presented by Arina Nikandrova

• 14 October 2021

ICEF-FES-NES Micro Theory Workshop in Higher School of Economics (Moscow)

Imposing Commitment to Rein in Overconfidence in Learning slides

• 1 September 2021

Learning, Evolution and Games Conference (LEG) (Online)

Privacy Paradox: When Hiding in Plain Sight Works slides

• 22 July 2021

The 6th World Congress of the Game Theory Society (GAMES) (Budapest, Hungary, Online)

Privacy Paradox: When Hiding in Plain Sight Works slides

• 30 June 2021

WEAI Virtual 96th Annual Conference

Implications of Overconfidence on Information Investment slides

• 13 June 2021

The 20th Annual Society for the Advancement of Economic Theory (SAET) Conference (Seoul, South Korea, Online)

Privacy Paradox: When Hiding in Plain Sight Works slides

• 3 June 2021

NRU Higher School of Economics (Moscow, Online)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

• 9 February 2021

Indian Institute of Technology Bombay (Online)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

• 23 December 2020

NRU Higher School of Economics (Moscow, Online)

Diversity and Communication slides

• 15 October 2020

City, University of London (Online)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

presented by Arina Nikandrova 

• August 2020

The 12th World Congress of the Econometric Society (Bocconi University, Online)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

• 25 November 2019

The 89th Annual Meeting of the Southern Economic Association (Fort Lauderdale, FL, US)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

• 22 November 2019

ITAM (Mexico)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

• 31 October 2019

NRU Higher School of Economics (Moscow)

Disagreement Under Almost Common Knowledge of Rationality slides

presented by Emiliano Catonini 

• 31 October 2019

NRU Higher School of Economics (Moscow)

Privacy Paradox: When Does Hiding in Plain Sight Work? slides

• 17 July 2019

The 30th International Conference on Game Theory (Stony Brook University, NY, US)

When Should We Care About Privacy? slides

• 1 July 2019

The 19th Annual Society for the Advancement of Economic Theory (SAET) Conference (Ischia, Italy)

Disagreement Under Almost Common Knowledge of Rationality slides

• 4 April 2019

NRU Higher School of Economics (Moscow)

When Should We Care About Privacy? Information Collection in Games slides

• 13 December 2018

NRU Higher School of Economics (Saint Petersburg)

Implications of Overconfidence on Information Investment slides

• 5 December 2018

NRU Higher School of Economics (Moscow)

Endogenous Choice Between Ultimatum and Dictator Games: Experimental Evidence slides

• 19 November 2018

The 88th Annual Meeting of the Southern Economic Association (Washington, DC, US)

Endogenous Choice Between Ultimatum and Dictator Games: Experimental Evidence slides

• 2 November 2018

The 4th Lancaster Game Theory Conference (Lancaster University, UK)

Cognitive Hierarchical Model in Networks slides

• 1 November 2018

Birkbeck, University of London

Endogenous Choice Between Ultimatum and Dictator Games: Experimental Evidence slides

• 27 October 2018

The 10th Lisbon Meeting in Game Theory and Applications (Lisbon School of Economics and Management, Portugal)

Cognitive Hierarchical Model in Networks slides

• 27 August 2018

European Summer Meeting of the Econometric Society (University of Cologne, Germany)

Dynamic Choice of Information Sources slides

• 18 July 2018

The 29th International Conference on Game Theory (Stony Brook University, NY, US)

Cognitive Hierarchical Model in Networks slides

• 21 June 2018

North American Summer Meeting of the Econometric Society (UC Davis, CA, US)

Dynamic Choice of Information Sources slides

• 12 June 2018

The 18th Annual Society for the Advancement of Economic Theory (SAET) Conference (Academia Sinica, Taipei, Taiwan)

Implications of Overconfidence on Information Investment slides

• 31 May 2018

Toulouse School of Economics

Dynamic Choice of Information Sources slides

• 18 November 2017

The 3rd Lancaster Game Theory Conference (Lancaster University, UK)

Implications of Overconfidence on Information Investment slides

• 13 November 2017

Cambridge University

Dynamic Choice of Information Sources slides

• 9 November 2017

University of Warwick

Dynamic Choice of Information Sources slides

• 7 November 2017

Oxford University (Nuffield College)

Dynamic Choice of Information Sources slides

• 20 July 2017

The 28th International Conference on Game Theory (Stony Brook University, NY, US)

Dynamic Choice of Information Sources slides

• 24 February 2017

Carnegie Mellon University (Tepper School of Business)

Dynamic Choice of Information Sources slides

• 22 December 2016

NRU Higher School of Economics (Moscow)

Dynamic Choice of Information Sources slides

• 4 March 2016

The 18th Southwest Economic Theory (SWET) Conference (UC Riverside, CA, US)

Selective Exposure to Information slides

Are People Subject to Persuasion Bias? Test of DeGroot Model   joint with Li Song     September 27, 2017 

Stochastic Choice in Criterion Space     May 30, 2014