UC Irvine

The study of pricing is a fundamental topic in economics. This dissertation analyzes pricing strategies in labor and transportation markets.

Chapter 1 examines the impact of the crash of Alaska Airlines Flight 261 on the domestic fares and passenger traffic of the crash carrier, using a difference-in-difference approach. The results show that that the crash reduced fares of Alaska Airlines relative to those of its competitors only in the months right after the crash, indicating that the financial ramifications are not persistent, a finding that justifies the temporary drop in stock prices found in earlier literature.

Chapter 2 investigates the factors that contribute to wage selection in the labor market. When employers consider a job candidate, character assessment about the applicant is gathered from a variety of sources, impartial and subjective, ranging from academic merits to reviews by coworkers. The information is collected in order to make an appropriate wage offer. Existing experimental literature in agency theory provides employers with their employees' work records at no cost. I extend this research by placing a price on the information to develop a more realistic case. Through experimental evidence, I find employers absorb the cost of obtaining history, and do not shift the burden of the fee onto the employees in the form of lower wages. If employers have access to employees' history, they offer wages that are positively correlated with the employees' work ethic. However, when they are not presented with a history, the employers base wages on their own experiences.

The last chapter studies a different source an employer can use to determine wages. In past labor market experimental literature, an employee's work history was information the employer received from the employee. Chapter 3 of my dissertation modifies the agency problem by introducing a noisy signal from a third party, specifically the employee's past employer. The results of this experimental study show that cooperation is more prominent when employee references are accessible, even if the evaluations are imprecise.