Research Summary

Microeconomics is about modeling the agents’ behavior. I firmly believe that models can help us to understand better human behavior, which has extensive applications in the real world. In particular, I focus on the interaction of agents facing information asymmetries, mostly Moral Hazard. I focus my research on finding new economic models that allow us to understand the misbehavior of some agents better. Currently, I am working on moral hazard and endogenous matching.

I am also very interested in developing solutions for real-life problems using the Microeconomic Theory. Is in this part, for example, that I studied optimal bidding and developed software to assist in the analysis of how the auction environment affects the bidding strategy adopted by the bidders. I am convinced that incorporating the economic techniques on modeling situations into daily basis applications can make a big difference in the performance of individuals, institutions, and companies.

Interests

  • Corporate Finance Theory
  • Contract Theory
  • Industrial Organization
  • Auctions

Work in Progress

  • Bidding in First Price Sealed Bid Auctions: A Computational Approach (with Ingemar Dierickx)

    We quantify the effects of different dimensions of heterogeneity among bidders in a First Price Sealed Bid auction, by using computer simulations.

    Computational methods are used to analyze bidding in first price sealed bid auctions for a broad range of realistic scenarios. Bidders valuations may have both common value and firm-specific components, and the accuracy of their estimates of the common value component may differ. Also, we allow for a subset of “naive” bidders, defined as bidders who do not account for the Winners Curse. We find that, when estimates are independently distributed, bids can be determined by applying a constant Shading Factor that can be computed ex-ante of receiving a signal. Our computations confirm that these bids are very sensitive to asymmetries in the bidding population and, in particular, to the presence of naive bidders. Assuming that a rival is rational when in fact he is naive results in underbidding when facing that rival only and in overbidding in all other cases.
  • An Exact Solution to the Multiple-Bidder Pure Common Value First-Price Sealed Bid Auction with Gaussian Noise and Diffuse Prior (with Steffen Hoernig)

    An exact solution for the bidding function of a bidder facing multiple symmetric competitors in a first price sealed bid common value auction.

    We explicitly derive the Bayesian Nash equilibrium bids for the
    pure common value …rst price sealed bid auction for any number of
    bidders, with normally distributed noise and diffuse prior, and show
    that the equilibrium bidding function has constant shading.