This dissertation investigates empirical perspectives on strategic interactions in oligopolistic and auction markets. To support my claims, I structurally estimate, test, and simulate economic hypotheses regarding post-merger market prices (Chapter 1) and the effects of regret-averse attitudes in auction markets (Chapter 2). I also propose a structural estimation method for experimental auction data (Chapter 3).

This dissertation studies how asymmetric information between economic agents interacts with their incentive in dynamic games and mechanism design. Chapter 1 and Chapter 2 study this in mechanism design, especially focusing on robustness of mechanisms when a mechanism designer’s knowledge on agents’ belief and higher order beliefs is not perfect. In Chapter 1 we introduce a novel robustness notion into mechanism design, which we term confident implementation; and characterize confidently implementable social choice correspondences. In Chapter 2, we introduce another robust notion, p-dominant implementation where p ∈ [0, 1]N and N ∈ N is the number of agents, and fully characterize p-dominant implementable allocations in the quasilinear environment. Chapter 1 and Chapter 2 are related in the following way: for some range of p, a p-dominant implementable social choice correspondence is confidently implementable.

In Chapter 3, we study information disclosure problem to manage reputation. To study this, we consider a repeated game in which there are a long-run player and a stream of short-run players; and the long-run player has private information about her type, which is either commitment or normal. We assume that the shot-run player only can observe the past K ∈ N periods of information disclosed by the long-run player. In this environment, we characterize the information disclosure behavior of the long-run player and also equilibrium dynamics whose shape critically depends on the prior.

This dissertation studies the efficient and fair allocation of indivisible goods without monetary transfer. It is a collection of three papers and uses school-choice programs as a motivating example. I provide theoretical results that can guide the design of new allocation systems as well as tools that can be used to enhance existing systems.

In Chapter 1, I analyze how information disclosure affects social welfare using a stylized model. In my model, the utility of agents consists of a vertical "quality" component and a horizontal "idiosyncratic taste" component. The exact qualities of the objects are unknown to the agents, and the social planner seeks an information-disclosure policy that will maximize the total utility. The results show that (1) the optimal disclosure policy hides small differences in quality and reveals large differences in quality, (2) more information is disclosed when the valuations of the quality are heterogeneous, and (3) the Immediate Acceptance mechanism is more conducive for information disclosure than the Deferred Acceptance mechanism.

In Chapter 2, I study the collocation of groups of students in school-choice programs. In particular, I examine when and how stochastic assignment matrices can be decomposed into lotteries over deterministic assignments subject to collocation constraints. I first show that---regardless of the number of pairs of twins in the student body---twin collocation can be maintained in a decomposition if one extra seat can be added to each school. I then propose a decomposition algorithm based on Column Generation that can incorporate a wide variety of constraints including collocation constraints.

In Chapter 3, I propose a new notion of fairness that combines the concept of rank values and the maximin principle. An assignment is rank-egalitarian undominated (REU) if there is no other assignment that is equally or more egalitarian for any set of rank values. I show that each REU assignment can be generated as a solution to a linear programming problem that maximizes the weighted sum of expected rank values of the worst-off agents. I also provide an algorithm that generates special subsets of REU assignments that are practically important.

This dissertation studies three topics in information economics. In Chapter One, “Monopoly and Competition in the Markets for Information”, I analyze the generation and provision of information products, and the implications of competition in these markets. In the model, buyers face a decision problem with uncertainty about the states of the world. A buyer can purchase experiments to augment his private information, therefore the value of an experiment depends on his private information. To generate these experiments, sellers have to make an investment, which determines the most informative experiment a seller can provide. Sellers then post menus of experiments and prices. I first characterize the optimal menu given any investment level and derive the optimal investment. When two sellers compete with investment, I find an equilibrium in which two sellers split the market: one seller only serves to high belief buyers and the other serves to low beliefs buyers. Each seller specializes in generating a more informative signal about one state. Monopoly seller always provides more informative experiments, and to more buyers, than the case of duopoly competition.

In Chapter Two, “Preferential Attachment as an Information Cascade in Emerging Networks”, I study the preferential attachment observed in real-world social networks as a social learning problem. Networks grown via preferential attachment exhibit the "rich-get-richer" phenomena; nodes with higher connectivity degree are more likely to acquire more connections. This chapter develops a Bayesian social learning model in which agents arriving sequentially to a network judge the qualities of predecessor agents based on their own private signals, and on public signals inferred from the observed network structure. It shows that preferential attachment emerges endogenously as a sequentially equilibrium of the social learning process, where agents may engage in a rational herd behavior. The condensed preferential attachment, in which one agent gets all the future links, emerges with probability one when the private signals are bounded.

In Chapter Three, “Information Design in Contests”, I consider the information disclosure problem in contests. The designer of a contest has an informational advantage over agents’ ability. There is a strong agent (res. weak agent) who will has a higher probability of being a high ability (res. low ability) player. In the optimal information disclosure policy, the designer discriminates two types of agents. When the weak agent has a disadvantage in abilities, the designer will partially disclose the state to him privately. Compared with the no-disclosure benchmark, the optimal policy increases the total effort level. On the other hand, committing to a public message disclosure can not improve the equilibrium of the no-disclosure benchmark.

Social and economic networks play an increasingly significant role in people's lives. The formation of such networks do not only provide exchange of material or monetary benefit, but also transmission of information. By creating direct links and indirect connections with others, on one hand the delivery of goods and financial transfers are made such as in trade networks or in buyer-seller networks, and on the other hand agents learn valuable, payoff related information from own observation or peer reviews. For this dissertation I studied network formation and related problems from various aspects. These studies have pointed to overlooked but crucial factors in the information structure among strategic agents and the process of information acquisition, which once taken into account have produced theoretical predictions in stark contrast to the existing literature, and have reconciled long-existing inconsistency between theory and data.

Chapter 1 studies the problem of social learning through observation. Social learning is the study of how dispersed information gets aggregated in a society of strategic agents, and what kind of structure of information acquisition the society needs to facilitate efficient information aggregation. The existing literature always assumes that the observation structure is exogenous, in other words, the structure of who observes whose actions is exogenously given by some deterministic or stochastic process. However, it is more natural or realistic to assume that observation is costly and strategic. My study takes this alternative assumption and shows that in contrast to the condition of expanding observation -- meaning to observe a close predecessor -- in the literature, a sufficient and necessary condition for the highest level of social learning with costly endogenous observation is infinite observation, i.e. to observe an arbitrarily large number of predecessor. Endogenous observation also brings about a great difference in terms of individual behavior and social welfare.

Chapter 2 addresses the question of how networks form and what their ultimate topology is, under the much more natural yet hardly adopted assumption of incomplete information: agents do not know in advance -- but must learn --the value of linking. This study shows that incomplete information has profound implications for the formation process and the ultimate topology. Under complete information, the network topologies that form and are stable typically consist of agents of relatively high value only. Under incomplete information, a much wider collection of network topologies can emerge and be stable. Moreover, even with the same topology, the locations of agents can be very different: an agent can achieve a central position purely as the result of chance rather than as the result of merit. All of this can occur even in settings where agents eventually learn everything so that information, although initially incomplete, eventually becomes complete. The ultimate network topology depends significantly on the formation history, which is natural and true in practice, and incomplete information makes this phenomenon more prevalent.

Chapter 3 again provides an analysis of the network formation process, but in another understudied strategic environment -- one where agents are foresighted and care about both current and future payoffs. The related theoretical literature has often adopted a framework with homogeneous agents, and predicted that in generic cases it is impossible to sustain efficient networks even if such a network generates a positive payoff for every agent. However, these predictions are contradicted by data from existing real-life networks. This study analyzes a dynamic model allowing for agent heterogeneity and foresight, and establishes a Folk Theorem of networks, characterizing the set of sustainable networks in equilibrium for patient agents, and find that efficient networks can be sustained in equilibrium as long as it guarantees every agent a positive payoff. In the widely studied connections model which adopts a particular class of this valuation structure, a full characterization of efficient network is presented, which turn out to bear a striking resemblance in topology to networks observed in real life.

This dissertation theoretically analyzes three topics in industrial organization. The first chapter introduces tests for price competition among multi-product firms. The tests are based on the firm's revealed preference (revealed profit function). I employ a demand structure introduced by Nocke and Schutz (2018), the discrete/continuous choice model, which nests the multinomial logit demand and CES demand functions. Any price and quantity data can be rationalizedby price competition under a discrete/continuous choice model and increasing marginal costs. Adding more assumptions on the demand function, such as logit, CES, or the co-evolving and log-concave property produces some falsifiable restrictions.

The second and third chapters analyze seller's reputation maintenance behavior in dynamic models. Chapter 2 theoretically analyzes fake reviews on a platform market using models where a seller creates fake reviews through incentivized transactions, and its sales depend on its rating based on a review history. The platform can control the incentive for fake reviews by changing the parameters of the rating system, such as weights placed on old and new reviews and its filtering policy. At equilibrium, the number of fake reviews increases as quality increases but decreases as reputation improves. Since fake reviews have a positive relationship with a product’s underlying quality, rational consumers find a rating more informative when fake reviews exist, while credulous consumers suffer from a bias caused by boosted reputation. A stringent filtering policy can decrease the expected amount of fake reviews and the bias of credulous consumers, but at the same time, it can decrease the informativeness of a rating system for rational consumers. In terms of the weight placed on the review history, rational consumers benefit from higher weights on past reviews than from optimal weights without fake reviews.

In Chapter 3, sellers build their reputation through their investment in product safety. I show that the platform's liability for the third-party products distorts the sellers' incentive to invest in product safety.

In my dissertation, I provide two models of joint contribution games that are relevant to the phenomenon of crowdfunding. I also provide a characterization of Bayes Nash equilibrium.

In the first chapter I build a model of crowdfunding. An entrepreneur finances her project with common value via crowdfunding. She chooses a funding mechanism (fixed or flexible), a price, and a funding goal. Under fixed funding money is refunded if the goal is not met; under flexible funding the entrepreneur keeps the money. Backers observe signals about the value and decide whether to contribute or postpone purchase to the retail stage. The optimal crowdfunding campaign is characterized. When the entrepreneur has commitment power, fixed funding generates more revenue than flexible funding. When the entrepreneur has no commitment power, fixed funding serves as a commitment device to eliminate moral hazard

In the second chapter I consider a dynamic contribution game under two regimes. The first regime is that all but the last rounds are cheap talk, the other is that in all rounds contribution is sunk. With binary contribution levels and a continuum of types we show that one of the monotone equilibria in the first regime implements the ex-post efficient and ex-post individually rational allocation when the cheap talk period is long enough. In contrast, when commitment is required, no equilibria achieves the same allocation. However, with a continuum of contribution levels, all equilibria of the contribution game with cheap talk will be the same as a one-shot game with no cheap talk, due to severe free riding. In this case, dynamic contribution with commitment provides credibility and can significantly improve efficiency.

In the third chapter, coauthored with Ichiro Obara, we prove the following characterization regarding types and Bayes equilibrium actions they play across games: Given any two types in any two countable type spaces, if for all finite games, the two types have the same pure Bayes Nash equilibrium action, then there exists a bijective belief morphism between them. As an application, our result implies that the universal space for Bayes Nash equilibrium that retains non-redundancy does not exist.

This dissertation studies market design and auction theory. Chapter 1 studies the impact of school choice on segregation. It shows that the popular school choice mechanisms lead to substantially different school and residential segregation, an important and overlooked aspect of choosing among school choice mechanisms. We show that open enrollment policy in public school choice program can decrease diversity of individual schools and increase segregation depending on which student allocation mechanism is used. Without open enrollment, we study the model of location choice and show that segregation is mainly associated with income. In comparing mechanisms, we show that Boston mechanism fosters segregation more than the deferred acceptance. With open enrollment, the difference between BM and DA becomes more drastic. We show that BM can actually intensify segregation when open enrollment policy is adopted, while DA is more resilient to segregation. The deferred acceptance with multi tie breaking creates maximally diverse schools. Chapter 2 considers conventional auctions when the seller can design bid spaces. Any symmetric equilibrium in a second price auction with bid spaces can be replicated with an equilibrium in a first price auction with bid spaces, but the converse doesn't hold. First price auctions with designed bid spaces revenue dominates second price auction with designed bid spaces, and well-designed first price auction is an optimal selling mechanism. Chapter 3 studies one-to-one matching environment without transfer in the presence of incomplete information on one-side. The existing notions of stability under incomplete information are studied and two alternatives are proposed. Weak Bayesian stability requires that the beliefs of the agents are dervided from a common prior via Bayes' rule and are internally consistent with the presumption that the given matching is stable. Strong Bayesian stability refines weak Bayesian stability by requiring the beliefs of agents are also externally consistent in the sense that the beliefs are narrowed down only when there is a valid reason.

My dissertation is composed of three chapters. In the first, I study the incentive role of information – how the strategic release of information can induce an agent to exert more effort on a project. More specifically, I focus on how feedback can be provided to a worker who is uninformed about the progress they make on a long term project. I show that delaying feedback about their performance can induce the worker to continue working on the project longer than they would were they to learn about their performance without delay. Negative feedback, due to the absence of good news, received in the early stages of the project can cause them to quit prematurely. In the second chapter, I study a model of matching between individuals and institutions. Matching models allow researchers to identify optimal allocations of individuals to school seats, medical residency programs and other positions over which individuals have preferences and for which they may differ in suitability. While we know that in models in which individuals only care about the institution they match with, stable matchings always exist, I show that when individuals also care about the the number of matches made by the institution they join, stable matchings no longer exist in general. I show that stable matchings can only be found under a set of conditions I identify. Relaxing any of these conditions leads to examples of markets with no stable matchings. In the third chapter, I set out to understand why elected politicians choose to toe the party line instead of voting on issues according to their own preferences. I find that despite the short term benefits of voting for their preferred policies, there are long-term benefits from coordinating their voting behavior among like-minded legislators. These findings provide a rationale for why political parties form among politicians with similar policy positions.