Publications

Monopoly Pricing with Optimal Information (with Guilherme Carmona) [old version with additional results], Journal of Economic Theory, 228 (2025)

We analyze a monopoly pricing model where information about the buyer's valuation is endogenous. Before the seller sets a price, both the buyer and the seller receive private signals that may be informative about the buyer's valuation. The joint distribution of these signals, as a function of the valuation, is optimally chosen by the players. In general, players have conflicting incentives over the provision of information. As a modelling device, we assume that an aggregation function determines the information structure from the choices of the players, and we characterize the equilibrium payoffs for a natural class of aggregation functions. Every equilibrium payoff can be achieved by an information structure that is the result of the seller trying to make both players uninformed while the buyer tries to learn about his valuation. Price discrimination is limited to the seller setting different prices for informed vs uninformed buyers.

Stable Matching in Large Markets with Occupational Choice (with Guilherme Carmona) [long version], Theoretical Economics, 19 (2024)

We introduce a model of large many-to-one matching markets with occupational choice where each individual can choose which side of the market to belong to. We show that stable matchings exist under mild assumptions; in particular, both complementarities and externalities can be accommodated. Our model generalizes Greinecker and Kah (2021), which focuses on one-to-one matching and did not allow for occupational choice. Applications include the roommate problem with non-atomic participants, explaining the size and distribution of firms and wage inequality.

Improving the Organization of Knowledge in Production by Screening Problems (with Guilherme Carmona) [supplementary material] [code], Journal of Political Economy, 132 (2024)

We extend Garicano's (2000) model of optimal organizations by allowing problems to be screened. We show that when screening is as costly as solving problems, optimal organizations are hierarchies as in Garicano (2000), but when the cost of screening is small, workers screen all problems that they and the top managers cannot solve, those problems that they screen are sent directly to those who can solve them and those problems that they neither solve nor screen are passed to the top managers. For intermediate values of the screening cost, the optimal organization is a hybrid of the above forms.

The Folk Theorem for the Prisoner's Dilemma with Endogenous Private Monitoring (with Guilherme Carmona) [supplementary material], Journal of Economic Theory, 213 (2023)

We study the repeated prisoner's dilemma with private monitoring under the assumption that the monitoring structure is endogenously chosen by the players in each period. We allow the players to choose from all possible monitoring structures. If the players disagree on the monitoring structure they would like, the realized monitoring structure is determined by a function that aggregates their choices. When one player can dictate the monitoring structure, then the repetition of the stage Nash is the only sequential equilibrium outcome. In contrast, when no player can dictate the monitoring structure, we provide conditions on the aggregation function under which any strictly individually rational and feasible payoff vector can be supported in sequential equilibrium.

Private and Common Value Auctions with Ambiguity over Correlation (with Gilat Levy and Ronny Razin), Journal of Economic Theory, 184 (2019)

We analyse auctions when individuals have ambiguity over the joint information structures generating the valuations and signals of players. We analyse how two standard auction effects interact with the ambiguity of bidders over correlation structures. First, a competition effect arises when different beliefs about the correlation between bidders' valuations imply different likelihoods of facing competitive bids. Second, a winner's value effect arises when different beliefs imply different inferences about the winner's value. In the private values case, only the first effect exists and this implies that the distribution of bids first order stochastically dominates the distribution of bids in the absence of ambiguity. In common value auctions both effects exist and we show that compared to the canonical model, both in the first-price and second-price auctions, these effects combine to imply that the seller's revenue decreases with ambiguity (in contrast with the private values case). We then characterise the optimal auction in both the private and common value cases. A novel feature that arises in the optimal mechanism in the common values case is that the seller only partially insures the high type against ambiguity.

Working papers

Rent Extraction with Information Acquisition

This paper provides a framework for modelling information acquisition and revisits the classic mechanism design question of when privately informed buyers in an auction setting can expect to receive economic rents. It is well known that under standard assumptions, the seller can fully extract rent for generic prior distributions over the valuations of the buyers. However, a crucial assumption underlying this result is that the buyers are not able to acquire any additional information about each other. Our framework allows us to model the possibility of information acquisition in a general way. We provide necessary and sufficient conditions on the information acquisition technology for the seller to be able to fully extract rent. Unlike in the standard model, these conditions are not generically satisfied. Indeed, under suitable continuity assumptions, the set of information acquisition technologies that allow full rent extraction is negligible from a topological point of view.

Privately Designed Correlated Equilibrium (with Guilherme Carmona) [supplementary material]

We consider a setting where each player of a simultaneous-move game privately designs an information structure before playing the game. One of these designs is chosen at random to determine the distribution of the private messages that players receive. These messages allow players to correlate their actions; however, private information design implies a push from correlated to Nash equilibria. Indeed, the sequential equilibrium payoffs of the private information design extensive-form game are correlated equilibrium payoffs of the underlying simultaneous-move game, but not all correlated equilibrium payoffs are sequential equilibrium payoffs. In generic 2-player games, the latter are specific convex combinations of two Nash equilibrium payoffs.

Rosen meets Garicano and Rossi-Hansberg: Stable Matchings in Knowledge Economies (with Guilherme Carmona) [supplementary material]

We use the framework of large many-to-one matching markets with occupational choice introduced in Carmona and Laohakunakorn (2024) to formally compare the knowledge-based theories of Rosen (1982) and Garicano and Rossi-Hansberg (2004). We show that these theories differ only in three elements: the factor share of labor in the goods' production function, the payment to self-employed individuals and the number of workers each manager can hire. These differences imply starkly different properties of the stable matchings of the two theories. We decompose these differences by characterizing the stable matchings of a sequence of markets that allows us to move from Rosen's (1982) market to Garicano and Rossi-Hansberg's (2004) market by changing only one element at each step. This shows that the difference in the number of workers each manager can hire accounts for the qualitative difference in the properties of the stable matchings of the two theories.

Large Strategy-Proof Mechanisms (with Guilherme Carmona, Henrique Castro-Pires, and Konrad Podczeck)

We introduce a distributional approach to mechanism design that proves to be useful for the analysis of large anonymous mechanisms in a private values setting. We use this setting to relate the classic notions of strategy-proofness and envy-freeness for anonymous mechanisms to approximate versions of these notions. We show that, in a generic sense, there is no difference between the exact and approximate versions of these notions.

Existence of Stable Matchings in Large Economies with Externalities (with Guilherme Carmona) [long version]

We extend the two-sided many-to-one matching setting of Che, Kim, and Kojima (2019) by allowing workers' preferences to depend on the matching itself. In finite markets, complementarities and externalities are both known to cause problems for the existence of stable matchings. Che, Kim, and Kojima (2019) find that in a large market with a continuum of workers, a stable matching exists even when the firms' preferences exhibit complementarities. In the same spirit, we show that as long as workers' preferences depend on the matching in a continuous way, a stable matching exists in the presence of both complementarities and externalities.

A Nash Threats Folk Theorem for Repeated Games with Local Monitoring

We study sequential equilibrium payoffs of a repeated game with local interaction and local monitoring. An undirected network determines both the interaction and the monitoring structure. When players do not discount the future, a sequentially rational Nash threats folk theorem holds without any restrictions on the network structure. To prove this result, we construct strategies that support as a sequential equilibrium any payoff vector which is a convex combination (with rational weights) of stage game payoffs and is such that each player is strictly better off than under a Nash equilibrium of the stage game. No form of communication or coordination device is required. On the other hand, when players discount the future, the folk theorem cannot hold in our setting unless further restrictions are made either on payoffs or the network structure.

Book chapters

A Deferred Acceptance Algorithm for Large Marriage Markets (with Guilherme Carmona), in Matching, Dynamics and Games for the Allocation of Resources: Essays in Celebration of David Gale's 100th Birthday, eds. M. Ali Khan, Nobusumi Sagara, and Alexander J. Zaslavski, Springer (2025)

We consider a version of Gale and Shapley's (1962) marriage market featuring a continuum of women and men based on Greinecker and Kah (2021). We define a deferred acceptance algorithm for this setting and show that it terminates after a finite number of iterations to yield a side-optimal stable matching.