Selected Works and Working Papers.
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1. Reasons for Peace: Peace talks are seldom successful (i.e., reach a lasting agreement) and since 1914, their success rate fell from 40 to 13 percent. In this paper, I model wartime negotiations, account for their declining success and characterize the welfare-maximizing (optimal) negotiation design. The model extends the reputational bargaining framework by allowing players to exert hidden effort preventing surplus destruction and military defeat. I find that the declining success of wartime negotiations can be rationalized by an increase in ceasefire (i.e., pauses in fighting) coinciding with negotiations. Intuitively, combatants only negotiate when fighting reaches a draw and a persisting draw prompts combatants to quickly reach an agreement. Ceasefires avoid costly fighting but ensure that a persisting draw is uninformative: thus combatants stall and are less likely to reach an agreement. I find natural conditions for when it is never desirable to negotiate during a negotiation. Nonetheless, the optimal negotiation may begin with a brief ceasefire and subsequently continues as combatants fight.
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2. Optimal Sequential Experimentation: An impatient decision-maker (DM) learns about an unknown state by running a sequence of experiments. He does so by managing a jump-diffusion signal process with state-dependent dynamics. The DM controls the signal’s precision and arrival rate of jumps, but faces flow costs convexly increasing in the signal’s informativeness. Jumps describe precise, infrequently-arriving breakthroughs, while the diffusion models imprecise, frequently-arriving observations. If the DM could, instead, flexibly manage how he learns over time, then Zhong (2022) finds that only learning from breakthroughs is optimal. When the DM has to experiment as described above, however, it is without loss of generality to only consider experiments that never generate breakthroughs. Intuitively, the DM cannot separately manage the precision and composition of acquired information. Hence, the marginal experimentation costs equals the marginal benefits of producing both infrequent breakthroughs and frequent, noisy observations.
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3. The Game of Snake (Upcoming, latest research (early stage), slides available here): Technological progress is key to wealth generation and nations, consequently, invest heavily in research and development (R& D). Over time, however, the direction of research is increasingly narrow and unresponsive to new findings (Park et al 2023): thus, technological progress stalls. In this paper, I rationalize the trends above when a scientist's skills are valued outside of R&D and, in discovery, there are overall agglomeration gains. This is because new discoveries increases non-research productivity and thus its wages. Over time, rising, non-research wages prompts increasing concentration in scientific topics with decreasing social and private value.
4. Learning to Commit: I study the relation between limited commitment and learning in auctions. In each period, the seller sets the terms for an auction selling an indivisible good among multiple buyers; but if the item fails to sell, he cannot pre-commit to the terms of future offerings. I find that, in interdependent value settings, the seller's equilibrium revenues are greater than immediately running an efficient, Vickrey auction. In contrast with private value settings, this result persists regardless of how often the seller may interact with buyers. This is because learning among buyers both limits how many times a good can be gainfully re-offered and the information rents that each buyer can demand the seller. Intuitively, buyers lower their valuations in response to their peer's lack of interest. This progressively lowers the trade surplus and compresses the support of valuations. As the dispersion in valuations falls, the seller further extracts an increasing share of the remaining trade surplus.
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5. Firms As Experimental Partnerships.
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To assess the employment opportunities of older job-changers in the years prior to retirement, this study examines the how the breadth of occupations in which they find employment narrows as they age past their prime working years and how this differs by gender and educational attainment. The results indicate that workers who change jobs in their early 50s find employment in a reasonably similar set of occupa- tions as prime-age workers, with opportunities narrowing at older ages. They also indicate that job opportunities broadened significantly for better-educated older workers since the late 1990s. While job opportunities now narrow significantly for less-educated men in their late 50s, this narrowing primarily occurs in the early 60s for women and better-educated men. In contrast to previous research, the study finds that employer policies that emphasize hiring from within are less important barriers to the hiring of older job-seekers. The study also finds that the narrowing of job opportunities is associated with a general decline in job quality as measured by median occupational earnings, a decline associated with differences in occupational skill requirements and the underlying economic environment. These results suggest that older hiring is not as limited to a select few occupations as it had been in previous decades, and that policy reforms aimed at increasing opportunities and improving labor market fluidity might best be served if they focused on less-educated men.