The Economics of Deferral and Clawback Requirements

(with Roman Inderst and Marcus Opp), Journal of Finance, 2022, 77 (4), 2423-2470.

Harvard Law School Forum on Corporate Governance post can be found here.

 

Dynamic Multitasking and Managerial Investment Incentives 

(with Sebastian Pfeil), Journal of Financial Economics, 2021, 142 (2), 954-974. 

The Online Appendix with some supplementary material can be found here.

 

Only Time Will Tell: A Theory of Deferred Compensation 

(with Roman Inderst and Marcus Opp), Review of Economic Studies, 2021, 88 (3), 1253-1278.

 

Persuasion through Selective Disclosure: Implications for Marketing, Campaigning, and Privacy Regulation

(with Roman Inderst and Marco Ottaviani), Management Science, 2020, 66 (11), 4958-4979. 

 

Taxing Externalities under Financing Constraints 

(with Roman Inderst and Ulf Moslener), Economic Journal, 2017, 127 (606), 2478-2503.

Pre-Sale Information 

(with Roman Inderst), Journal of Economic Theory, 2011, 146 (6), 2333-2355.

Supplement with some additional material: Supplement to "Pre-Sale Information".

Older (working paper) version: Price Discrimination and the Provision of Information.

 

Reward for Luck in a Dynamic Agency Model 

(with Sebastian Pfeil), Review of Financial Studies, 2010, 23 (9), 3329-3345.  

 

Worker Runs 

(with Vladimir Vladimirov), forthcoming Journal of Finance

Abstract: The voluntary departure of hard-to-replace skilled workers worsens firm prospects, which can prompt additional departures. We develop a model in which firms design compensation to limit the risk of such "worker runs." To achieve cost-efficient retention, firms combine fixed wages with dilutable compensation - such as vesting equity or bonus pools - that pays remaining workers more when others leave but gets diluted otherwise. Compensating (identical) workers with differently-structured compensation - that is, with a different mix of output-dependent and -independent pay - can further help mitigate the worker run problem by ensuring a critical retention level in a cost-efficient way.

Non-technical summary for FT-Insights can be found here.

 

Auctions vs. Negotiations: The Role of the Payment Structure

(with Vladimir Vladimirov), forthcoming Journal of Finance

Abstract: We investigate a seller's strategic choice between optimally-structured negotiations with fewer bidders and an auction with more competing bidders when payments can have a contingent component, as is common in mergers and acquisitions, patent licensing, and employee compensation. The key factor favoring negotiations is that it allows the seller to set her preferred payment structure - i.e., the revenue-maximizing mix of cash and contingent pay; reserve prices are of secondary importance. Negotiations are more likely to dominate if synergies increase in bidders' productivity types (as with acquirer-target complementarities in M&A). Higher dispersion and magnitude of bidders' private valuations also favor negotiations. 

 

Disliking to Disagree

(with Kiryl Khalmetski and Mark T. Le Quement), revise & resubmit JEEA

Abstract: We formalize the notion of belief homophily under asymmetric information by introducing a preference for perceived disagreement aversion. We then study its implications for information sharing in a standard voluntary disclosure model in which sender and receiver have heterogeneous priors. Equilibrium disclosure by the perceived disagreement averse sender is partial and biased towards the prior opinion of the more confident party. A given receiver learns more from senders whose prior opinion differ more from his own but whose prior confidence level are more similar to his own. Senders’ preferences over communication partners induce assortative matching in prior opinions, which hurts information sharing.

 

Regulating Cancellation Rights with Consumer Experimentation

(with Roman Inderst and Sergey Turlo), EEA 2017 Meetings Paper.

Abstract: This paper analyzes the welfare implications of regulating consumers' rights of product return and contract cancellation. The key feature of our model of consumer experimentation is that, after returning a product, consumers turn back to the market and thereby exert a positive pecuniary externality on other firms. As a consequence, in the unregulated market equilibrium, there are always too few such cancellations and returns. A mandatory extension of consumers' rights of cancellation and return, in the form of commonly observed statutory minimum refund periods, increases efficiency only when consumers' share of the surplus is low, and it exacerbates the market failure when it is high. We also show that the generosity of consumers' cancellation rights is not a good predictor of market performance or competition in the market. 

Dividend Regulation and Risk-Taking in a Dynamic Model of Banking (with Sebastian Pfeil)

 

The Dynamics of Cap and Trade (with Sebastian Pfeil)