Recent Working Papers

Intermediary Commissions and Kickbacks, with Roman Inderst.
Characterizes when caps on commissions, mandatory disclosure, and other policy interventions aimed at subduing the use of commissions have unintended consequences for the efficiency of advice in simple model that embeds provision of product advice by an information intermediary into Hotelling model of competition between two price-setting firms.

Conglomeration with Bankruptcy Costs: Separate or Joint Financing? with Albert Banal Estanol.
Characterizes tradeoff between co-insurance and risk contamination for projects with binary returns, with predictions depending on the mean, variability, and skewness of returns, the bankruptcy recovery rate, the correlation across projects, the number and heterogeneous characteristics of projects.

Approval Regulation and Learning, with Application to Timing of Merger Control, with Abraham Wickelgren; this paper is the winner of the 2009 Robert F. Lanzillotti Prize for best paper in antitrust economics at the International Industrial Organization Conference.
Casts tradeoff between ex ante regulation (based on limited information about sign and magnitude of externality) and ex post policy intervention (involving costly reversion) as a collective experimentation problem.

Noise, Information, and the Favorite-Longshot Bias in Parimutuel Predictions, with Peter Norman Sørensen, American Economic Journal: Microeconomics, 2(1), 58–85; peer reviewed by NAJ Economics 2005, 11:3.
Testable implications for the sign and extent of favorite-longshot bias depending on the information to noise ratio present in the market, as affected by the number of bettors, the number of outcomes, the amount of private information, the level of participation generated by recreational interest in the event, the divisibility of bets, the presence of ex post noise, as well as ex ante asymmetries across outcomes.

Surprised by the Parimutuel Odds?, with Peter Norman Sørensen, American Economic Review, December 2009, 99(5), 2129–2134.
The favorite-longshot bias observed in parimutuel markets is consistent with the use of private information by bettors taking simultaneous positions. The ex post realization of a high market probability indicates favorable information about the occurrence of an outcome---and the opposite for longshots.

Mergers with Product Market Risk, with Albert Banal Estanol, Journal of Economics & Management Strategy, Fall 2006, 15(3), 577–608. [preprint]
Strategic implications of risk sharing in mergers, with predictions for the method of payment used (cash versus shares).

The Transition to Digital Television, with Jerome Adda, Economic Policy, January 2005, 41, 160–209. [pre-panel draft, presentation slides]
Conceptual and empirical framework for evaluating policies for the transition from analogue to digital television.

Social Learning in a Changing World, with Giuseppe Moscarini and Lones Smith, Economic Theory, 1998, 11(3), 657–665.
Only temporary informational cascades can arise if the state of the world is changing stochastically over time during the learning process.

The Favorite-Longshot Bias: An Overview of the Main Explanations, with Peter Norman Sørensen, Chapter 5 in Handbooks in Finance: Handbook of Sports and Lottery Markets, edited by Donald B. Hausch and William T. Ziemba, North Holland, 2008, 83-101.

Switching to Digital Television: Business and Public Policy Issues, with Norbert Maier, in Standard and Public Policy, edited by Victor Stango and Shane Greenstein, Cambridge University Press, 2006, 345-371.

Overture and Google: Internet Advertising Pay-Per-Click Auctions, with Andrew Ellam.