Joyee Deb

Price Discrimination and Investment Incentives

We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both consumer segments, and society overall, may suffer if the firm is unable to price discriminate. We extend the model to duopoly competition, and find that our results still hold.

Stability in large Bayesian games with heterogeneous players

Bayesian Nash equilibria that fail to be hindsight-(or, alternatively, ex-post) stable do not provide reliable predictions of outcomes of games in many applications. We characterize a family of large Bayesian games (with many players) in which all equilibria are asymptotically hindsight-stable, and discuss the consequences of this robustness property. In contrast to earlier literature, we establish hindsight stability in a class of games in which players are not anonymous and type spaces and action spaces can be infinite.

Relational Contracts with Subjective Peer Evaluations

We study optimal contracting in a setting where a firm repeatedly interacts with multiple workers, and can compensate them based on publicly available performance signals as well as privately reported peer evaluations. If the evaluation and the effort provision are done by different workers (as in a supervisor/agent hierarchy), we show that, using both the private and public signals, the first best can be achieved even in a static setting. However, if each worker is required to both exert effort and report on his co-worker’s performance (as in a team setting), the worker’s effort incentives cannot be decoupled from his truth-telling incentives. This makes the optimal static contract inefficient and relational contracts based on the public signals increase efficiency. In the optimal contract, it may be optimal to ignore signals that are informative of the worker’s effort.

Observability and Sorting in a Market for Names

Can firm names be tradeable assets when changes in name ownership are observable? Earlier literature focuses on trading of firm names when trading is not observable to the consumer. Yet, casual empiricism suggests that shifts in name ownership are often publicly known. This paper studies how firm names can be traded even under full observability. In equilibrium, even when consumers see a reputed name being divested they continue to trust it and so, these names are tradeable. I further demonstrate an appealing “sorting” property of these equilibria. Competent firms can separate themselves by buying valuable names, and incompetent firms can give themselves away by using worthless names.

Uniform Folk Theorems in Repeated Anonymous Random Matching Games

We study infinitely repeated anonymous random matching games played by communities of players, who only observe the outcomes of their own matches. It is well known that cooperation can be sustained in equilibrium for the prisoners dilemma, but little is known beyond this game. We study a new equilibrium concept, strongly uniform equilibrium (SUE), which refines uniform equilibrium (UE) and has additional properties. We establish folk theorems for general games and arbitrary number of communities. We extend the results to a setting with imperfect private monitoring, for the case of two communities. We also show that it is possible for some players to get equilibrium payoffs that are outside the set of individually rational and feasible payoffs of the stage game. As a by-product of our analysis, we prove that, in general repeated games with finite players, actions, and signals, the sets of UE and SUE payoffs coincide.

Conflict and Mobility: Resource Sharing Among Groups

We study a political competition between two groups, where the winner has the decision rights to allocate resources, like political parties deciding on sharing of patronage goods. What factors determine how resources are shared? We highlight an important force that affects distribution of resources, namely the ability to move between groups. In many contexts, group sizes are determined endogenously. For example, allocation of jobs based on party allegiance may influence individuals’ choices of switching party membership. We analyze how the ease of inter-group mobility affects resource allocation. One insight from existing literature is that the threat of conflict can also act as a constraint to how exploitative the elite can be. We investigate the combined effect of both factors. We show how inter-group mobility affects the possibility of conflict and in turn the extent of resource sharing? We find that sharing occurs in equilibrium. There are two reasons why the incumbent wants to shares resources with the opposition. First, if the incumbent retains too much surplus, it may attract switchers, which reduces the per capita share. Second, sharing resources increases the oppositions opportunity cost of engaging in conflict. There are thus two constraints on expropriation - the switching constraint and the conflict constraint. Optimal sharing is dictated by whether the constraint s bind. We also find a non-monotonic relationship between resource sharing and the cost of mobility. Our predictions are consistent with several stylized facts that cannot be explained by earlier models.