ERN: SearchPub Date : 2021-01-19DOI: 10.2139/ssrn.3768885
Y. Hsiao, S. Kemp, Maroš Servátka, Matt Ward, Le Zhang
{"title":"Time Costs and Search Behavior","authors":"Y. Hsiao, S. Kemp, Maroš Servátka, Matt Ward, Le Zhang","doi":"10.2139/ssrn.3768885","DOIUrl":"https://doi.org/10.2139/ssrn.3768885","url":null,"abstract":"Sequential search is often costly and time-consuming. The time cost is usually unknown ex ante and its presence and duration must be inferred as the search progresses. We disentangle the effect of time cost on search behavior from people’s (in)ability to perceive time delay between offers. We find that people are able to infer the existence of the time cost, but their inference is imperfect. We also compare the effect of time cost with the effect of monetary cost and find that the time cost reduces the amount of exerted search, but not as much as the monetary cost does. Discriminating between the effects is critical for increasing the empirical validity of search models and designing mechanisms capable of improving the quality of decisions, especially in unfamiliar or infrequently encountered situations.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125939296","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-11-25DOI: 10.2139/ssrn.3737823
Gianluca Rinaldi
{"title":"Learning from Liquidation Prices","authors":"Gianluca Rinaldi","doi":"10.2139/ssrn.3737823","DOIUrl":"https://doi.org/10.2139/ssrn.3737823","url":null,"abstract":"I develop a model of investor learning driven by mistaken inference from market prices. Investors have heterogeneous beliefs about the worst case return of a risky asset and take leverage to buy it. When the worst case becomes more likely, forced liquidations result in price crashes, which investors mistake for negative information about worst case returns. They therefore revise cash flow expectations downwards, henceforth requiring larger returns. The model predicts that crashes lead to persistent changes in future average returns and that larger crashes are followed by larger changes. To link the model to historical crashes, I consider two strategies associated with the Black Monday crash in 1987 and the Lehman Brothers bankruptcy in 2008. Hedged put options selling suffered severe losses around Black Monday, while arbitraging the difference in implied credit risk between the corporate bond and CDS markets was similarly negatively affected after the Lehman bankruptcy. The losses on these strategies in those crisis episodes were likely exacerbated by deleveraging, but the increased returns after the crashes have been remarkably persistent, consistent with the implications of my model.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115750341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-11-24DOI: 10.2139/ssrn.3736442
G. Tan, Junjie Zhou
{"title":"Consumer Heterogeneity and Inefficiency in Oligopoly Markets","authors":"G. Tan, Junjie Zhou","doi":"10.2139/ssrn.3736442","DOIUrl":"https://doi.org/10.2139/ssrn.3736442","url":null,"abstract":"Motivated by several recent papers on oligopoly theory, we characterize geometric properties of a class of inequalities involving the product of two integrals of the probability density quantile function and its reciprocal. Through three applications, we illustrate how our characterization can help enrich our understanding of the existing findings and shed some new insight, regarding the extent to which market inefficiency depends on the properties of the distributions of consumer heterogeneity.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"47 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127217788","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-11-18DOI: 10.2139/ssrn.3202534
I. Morozov, Stephan Seiler, Xiaojing Dong, Liwen Hou
{"title":"Estimation of Preference Heterogeneity in Markets with Costly Search","authors":"I. Morozov, Stephan Seiler, Xiaojing Dong, Liwen Hou","doi":"10.2139/ssrn.3202534","DOIUrl":"https://doi.org/10.2139/ssrn.3202534","url":null,"abstract":"The paper shows preference heterogeneity is overestimated when not accounting for search frictions and studies the impact of search frictions on optimal price setting.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"133 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116109058","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-10-16DOI: 10.2139/ssrn.3713005
Sumeyra Akin
{"title":"Matching with Floor Constraints","authors":"Sumeyra Akin","doi":"10.2139/ssrn.3713005","DOIUrl":"https://doi.org/10.2139/ssrn.3713005","url":null,"abstract":"Floor constraints are a prominent feature of many matching markets, such as medical residency, teacher assignment, and military cadet matching. We develop a theory of matching markets under floor constraints. We introduce a stability notion, which we call floor respecting stability, for markets in which (hard) floor constraints must be respected. A matching is floor respecting stable if there is no coalition of doctors and hospitals that can propose an alternative matching that is feasible and an improvement for its members. Our stability notion imposes the additional condition that a coalition cannot reassign a doctor outside the coalition to another hospital (although she can be fired). This condition is necessary to guarantee the existence of stable matchings. We provide a mechanism that is strategy‐proof for doctors and implements a floor respecting stable matching.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"164 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123281562","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-10-08DOI: 10.2139/ssrn.3707588
Francisco Gomes, Ryan Lewis, Jordan Nickerson
{"title":"Crowded Ratings: Clientele Effects in the Corporate Bond Market","authors":"Francisco Gomes, Ryan Lewis, Jordan Nickerson","doi":"10.2139/ssrn.3707588","DOIUrl":"https://doi.org/10.2139/ssrn.3707588","url":null,"abstract":"Consistent with a simple model of market segmentation, we document rating-based clientele effects in the corporate bond market. Net capital flows that arise due to idiosyncratic firm upgrades and downgrades cause significant price movements for the other bonds in the effected rating bucket. A one-standard-deviation flow into a rating bucket generates a 5 bp bond price reduction, equivalent to 4.1% of the monthly price variation driven by macro variables. This effect is highly persistent, with an approximate half-life of five months. Guided by the model, we also document a significant decaying spillover pattern to bond prices in adjacent buckets.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133863900","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-08-22DOI: 10.2139/ssrn.3051192
Liang Dai, Ming-yu Yang
{"title":"Organizations and Coordination in a Diverse Population","authors":"Liang Dai, Ming-yu Yang","doi":"10.2139/ssrn.3051192","DOIUrl":"https://doi.org/10.2139/ssrn.3051192","url":null,"abstract":"We study how organizations can exist to facilitate coordination in a diverse population by mitigating strategic uncertainty. Members of an organization are obliged to take collective actions, which mitigates strategic uncertainty. But some actions may be detrimental to some members, thus jeopardizing the organization's sustainability. This tradeoff caps organization size and limits the resulting welfare improvement. Organizations can exist only if coordination motives dominate the diversity of the population, up to a size limit. Our framework can be applied to examine the impact of immigration or polarization on the inclusiveness of the social order.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126185629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-07-27DOI: 10.2139/ssrn.3661779
Ayça Kaya
{"title":"Paying with Information","authors":"Ayça Kaya","doi":"10.2139/ssrn.3661779","DOIUrl":"https://doi.org/10.2139/ssrn.3661779","url":null,"abstract":"The founder of a start‐up (principal) who has a project with uncertain returns must retain and incentivize an agent using promise of future payments and information gathering. The agent's effort incrementally advances production and such advance is a prerequisite for gathering new information. The principal decides how much information to gather based on these incremental advancements. The principal faces cash constraints. The agent's outside option is large relative to his effort cost. Equilibrium features one of two outcomes: \u0000 immediate learning, whereby the agent's compensation is low, learning is immediate and retention is possible only conditional on the project being of high quality; or \u0000 gradual learning, whereby the agent's compensation is high, learning is gradual, the agent never quits and effort is inefficiently high.\u0000","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121037565","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-06-30DOI: 10.2139/ssrn.3388410
Filippo Massari
{"title":"Ambiguity, Robust Statistics, and Raiffa's Critique","authors":"Filippo Massari","doi":"10.2139/ssrn.3388410","DOIUrl":"https://doi.org/10.2139/ssrn.3388410","url":null,"abstract":"I show that ambiguity-averse decision functionals matched with the multiple-prior learning model are more robust to model misspecification than the standard expected utility with Bayesian learning. However, these criteria may fail to deliver robust decisions because the multiple-prior learning model inherits the same fragility of Bayesian learning. There are misspecified learning problems in which an ambiguity-averse DM optimally chooses a sequence of ambiguous acts over a sequence of risky acts that would deliver a strictly higher average utility.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133562277","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ERN: SearchPub Date : 2020-06-19DOI: 10.2139/ssrn.3634690
Eliana Carranza, R. Garlick, K. Orkin, Neil A. Rankin
{"title":"“Job Search and Hiring With Two-Sided Limited Information About Workseekers’ Skills","authors":"Eliana Carranza, R. Garlick, K. Orkin, Neil A. Rankin","doi":"10.2139/ssrn.3634690","DOIUrl":"https://doi.org/10.2139/ssrn.3634690","url":null,"abstract":"This paper presents field experimental evidence that limited information about workseekers'skills distorts both firm and workseeker behavior. Assessing workseekers'skills, giving workseekers their assessment results, and helping them to credibly share the results with firms increases workseekers'employment and earnings. It also aligns their beliefs and search strategies more closely with their skills. Giving assessment results only to workseekers has similar effects on beliefs and search, but smaller effects on employment and earnings. Giving assessment results only to firms increases callbacks. These patterns are consistent with two-sided information frictions, a new finding that can inform the design of information-provision mechanisms.","PeriodicalId":153208,"journal":{"name":"ERN: Search","volume":"162 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129318587","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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