Publications
"What the Past Tells about the Future: Historical Price in the Durable Good Market", with Jin Huang and Yuxin Chen, forthcoming, Management Science
Abstract: We investigate how historical price information (e.g., accessed through price trackers) influences consumers' purchase decisions and thus affects a firm's dynamic pricing strategy. We first show that when consumers with heterogeneous tastes are not informed about historical prices, the monopolist charges a high regular price for most of the time and periodically holds low-price sales. Then we consider the case in which a small fraction of consumers (such as price tracker users) become informed of historical prices. At the new equilibrium, the monopolist lowers the regular price and advances sales, implying shorter price cycles, more frequent sales, and a positive spillover effect of price tracker users’ informational advantage on the rest of uninformed consumers. We conclude with a discussion of the impact of price trackers on firms and other relevant managerial implications of the model.
Working Papers
"Growing Influence" (Job Market Paper)
Sheth Foundation ISMS Doctoral Dissertation Award (2021)
Young Economists' Essay Award, European Association of Research in Industrial Economics (2021)
Gregory Chow Best Paper Award, Chinese Economist Society (2022)
Best Paper Award, 4th Doctoral Workshop on the Economics of Digitization (2021)
Recipient of Rotman China Research Grant (2020)
Abstract: How do new firms grow and establish themselves through their product design? I answer this question with theoretical modeling and empirical findings on the online influencer market. I collect new blog post data from WeChat Official Accounts, and use machine learning methods to categorize the topics and advertising in posts made by the 1,002 most influential accounts. I find that new entrants to the influencer market begin their careers by specializing in niche topics with minimal advertisements. Over time, they cover a wider range of topics, and the extent of advertising grows. To understand the underlying mechanism, I develop a theoretical model of dynamic reputation and content design. An influencer faces audiences with heterogeneous tastes and can choose the fraction of posts allocated to different topics and advertisements over time. I employ a shock to the reputation of influencers to cross-validate the model. The model delivers further implications on how content design varies across influencers at different rankings, how influencers react to an exogenous preference shock, and the dynamics of ratings, and I find empirical evidence that supports these predictions.
"Limited Time Offer and Consumer Search", with Jin Huang, revise & resubmit, Management Science
Recorded ESWC presentation
Abstract: This paper studies a commonly seen but theoretically under-explored sales tactic: limited-time offer. A limited-time offer is any form of discount that a consumer can use on a purchase within a certain period of time. When consumers need time to investigate each product, a firm can endogenously direct the consumer search order by advertising limited-time offers, inducing potential consumers to sample its product early. Whether and how the firm uses limited-time offers depends on the reservation value of its product to the target market. When consumers have only outside options, the firm will use limited-time offers to gain prominence if and only if its reservation value is higher than the outside options. When there are many strategic firms competing for the same target market, the firm with higher reservation value will offer discounts in a shorter time window relative to its competitors, and in equilibrium, it will be sampled earlier by consumers. Contrary to the existing literature, we demonstrate that limited-time offers can increase total welfare through inducing the socially optimal search order.
"Optimal Experimentation Design with Secret Repetitions", with Qianjun Lyu
Abstract: We study a persuasion game with limited commitment in which a biased sender designs and conducts costly experiments to acquire information which he can conceal or reveal. The sender commits to the experiment design, but he can secretly repeat experiments and selectively report the outcomes. In the benchmark model, the optimal experiment turns out to be a one-round experiment and the sender truthfully discloses the experiment outcome. The cost of an experiment is a measure of credibility. Higher credibility leads to less informative experiment which lowers the receiver's payoff. With general payoff function of the sender, the above results remain with mild restrictions. We geometrically characterize the optimal experiment using the same concavification with Kamenica and Gentzkow (2011) but within a refined belief space.
"What the Past Tells about the Future: Historical Price in the Durable Good Market", with Jin Huang and Yuxin Chen, forthcoming, Management Science
Abstract: We investigate how historical price information (e.g., accessed through price trackers) influences consumers' purchase decisions and thus affects a firm's dynamic pricing strategy. We first show that when consumers with heterogeneous tastes are not informed about historical prices, the monopolist charges a high regular price for most of the time and periodically holds low-price sales. Then we consider the case in which a small fraction of consumers (such as price tracker users) become informed of historical prices. At the new equilibrium, the monopolist lowers the regular price and advances sales, implying shorter price cycles, more frequent sales, and a positive spillover effect of price tracker users’ informational advantage on the rest of uninformed consumers. We conclude with a discussion of the impact of price trackers on firms and other relevant managerial implications of the model.
Working Papers
"Growing Influence" (Job Market Paper)
Sheth Foundation ISMS Doctoral Dissertation Award (2021)
Young Economists' Essay Award, European Association of Research in Industrial Economics (2021)
Gregory Chow Best Paper Award, Chinese Economist Society (2022)
Best Paper Award, 4th Doctoral Workshop on the Economics of Digitization (2021)
Recipient of Rotman China Research Grant (2020)
Abstract: How do new firms grow and establish themselves through their product design? I answer this question with theoretical modeling and empirical findings on the online influencer market. I collect new blog post data from WeChat Official Accounts, and use machine learning methods to categorize the topics and advertising in posts made by the 1,002 most influential accounts. I find that new entrants to the influencer market begin their careers by specializing in niche topics with minimal advertisements. Over time, they cover a wider range of topics, and the extent of advertising grows. To understand the underlying mechanism, I develop a theoretical model of dynamic reputation and content design. An influencer faces audiences with heterogeneous tastes and can choose the fraction of posts allocated to different topics and advertisements over time. I employ a shock to the reputation of influencers to cross-validate the model. The model delivers further implications on how content design varies across influencers at different rankings, how influencers react to an exogenous preference shock, and the dynamics of ratings, and I find empirical evidence that supports these predictions.
"Limited Time Offer and Consumer Search", with Jin Huang, revise & resubmit, Management Science
Recorded ESWC presentation
Abstract: This paper studies a commonly seen but theoretically under-explored sales tactic: limited-time offer. A limited-time offer is any form of discount that a consumer can use on a purchase within a certain period of time. When consumers need time to investigate each product, a firm can endogenously direct the consumer search order by advertising limited-time offers, inducing potential consumers to sample its product early. Whether and how the firm uses limited-time offers depends on the reservation value of its product to the target market. When consumers have only outside options, the firm will use limited-time offers to gain prominence if and only if its reservation value is higher than the outside options. When there are many strategic firms competing for the same target market, the firm with higher reservation value will offer discounts in a shorter time window relative to its competitors, and in equilibrium, it will be sampled earlier by consumers. Contrary to the existing literature, we demonstrate that limited-time offers can increase total welfare through inducing the socially optimal search order.
"Optimal Experimentation Design with Secret Repetitions", with Qianjun Lyu
Abstract: We study a persuasion game with limited commitment in which a biased sender designs and conducts costly experiments to acquire information which he can conceal or reveal. The sender commits to the experiment design, but he can secretly repeat experiments and selectively report the outcomes. In the benchmark model, the optimal experiment turns out to be a one-round experiment and the sender truthfully discloses the experiment outcome. The cost of an experiment is a measure of credibility. Higher credibility leads to less informative experiment which lowers the receiver's payoff. With general payoff function of the sender, the above results remain with mild restrictions. We geometrically characterize the optimal experiment using the same concavification with Kamenica and Gentzkow (2011) but within a refined belief space.
Work in Progress
"The Impact of Algorithmic Recommendation on Patience", with Guangrui Li and Xiaoquan (Michael) Zhang
Conference presentations: Conference of Digital Experimentation (2022)
Recipient of BEAR / BI-Org research grant (2021)
"How does Popularity Information Affect Product Design?", with Guangrui Li and Zhepeng Li
Conference presentations: CORS/INFORMS (2022), INFORMS Annual Meeting (2022), TD-MDAL Roundtable (2022)
Recipient of TD-MDAL research grant (2021)
"The Use of Most Favored Nations Clauses in Exclusive Supply Contracts", with Ignatius Horstmann and Frank Mathewson
"The Impact of Algorithmic Recommendation on Patience", with Guangrui Li and Xiaoquan (Michael) Zhang
Conference presentations: Conference of Digital Experimentation (2022)
Recipient of BEAR / BI-Org research grant (2021)
"How does Popularity Information Affect Product Design?", with Guangrui Li and Zhepeng Li
Conference presentations: CORS/INFORMS (2022), INFORMS Annual Meeting (2022), TD-MDAL Roundtable (2022)
Recipient of TD-MDAL research grant (2021)
"The Use of Most Favored Nations Clauses in Exclusive Supply Contracts", with Ignatius Horstmann and Frank Mathewson
Pre-doctoral Works
"Traffic Air Pollution - Regulation and Impact in Barcelona"
Media Coverage: Nada es Gratis (in Spanish)
Abstract: In January 2008, the maximum speed on motorways in the metropolitan area of Barcelona was limited to 80 km/h from previously 100 - 120 km/h to reduce air pollution. This paper aims to evaluate the effect of this zone 80 policy. A difference-in-differences estimation shows zone 80 policy significantly reduces NO2 concentration within the zone 80 area. Using wind direction to identify traffic pollution sources, we find a U-shape emission-speed curve and velocity gradient positively affect vehicle emission. We also provide evidence that the zone 80 policy significantly reduces vehicle velocity on motorways to a more efficient speed while only slightly affect the velocity gradient and car intensity. This effect explains the reduction of NO2 concentration by zone 80 policy.
"Traffic Air Pollution - Regulation and Impact in Barcelona"
Media Coverage: Nada es Gratis (in Spanish)
Abstract: In January 2008, the maximum speed on motorways in the metropolitan area of Barcelona was limited to 80 km/h from previously 100 - 120 km/h to reduce air pollution. This paper aims to evaluate the effect of this zone 80 policy. A difference-in-differences estimation shows zone 80 policy significantly reduces NO2 concentration within the zone 80 area. Using wind direction to identify traffic pollution sources, we find a U-shape emission-speed curve and velocity gradient positively affect vehicle emission. We also provide evidence that the zone 80 policy significantly reduces vehicle velocity on motorways to a more efficient speed while only slightly affect the velocity gradient and car intensity. This effect explains the reduction of NO2 concentration by zone 80 policy.