Research Ideas

Research Questions

  • How do advances in manufacturing/processing technology influence the organization of economic activity?  3-D printing in particular has the potential to break up large firms by reducing returns to scale; after all, it’s the epitome of decentralized, general purpose capital, and it can create complex shapes that expensive molds and machines can’t replicate at any price.
  • Is it more advantageous to think of economic agents as optimizing their welfare, or merely “satisficing” (that is, accepting any of a set of solutions that provides at least some welfare level)?  Is there a relationship between two, in the context of reference-dependent preferences?  That is, serially satisficing as a person’s reference point changes could lead to an optimum over time, so serial satisficing is the means by which learning agents optimize.  This presents the possibility that agents can inadvertently anchor themselves to local, rather than global, maxima.  A consequence of this might be that they put themselves in a position of being unable to implement (or even imagine) radical behavioral or institutional changes once they’ve settled.
  • What are the distributive effects of externalities and public policies intended to remedy them?  How effective are different arrangements in directing costs toward producers of negative externalities, and benefits toward producers of positive externalities?  Such arrangements include government regulation (mandates or proscriptions), taxes/subsidies, torts, and property rights.
  • Why do health care providers have such poor transparency in pricing?  Does openness in pricing enable smaller insurers or providers to negotiate terms more favorable than their size might otherwise permit?
  • Is “trust” an evolutionarily stable strategy?  Do multiple steady states exist?  How does policy reflect this (e.g. by discouraging/isolating rogue actors through fines or imprisonment)?
  • How does the coexistence of upfront costs and switching costs, together with statistical disparities and information asymmetries, impact labor markets?  Can discrimination persist in such a market?

Model-related Questions

  • Can above-marginal-cost pricing exist in a stable market without collusion?  Perhaps.  If competition is viewed as a repeated strategic game where N > 1 players choose between maintaining their price, matching their competitors, or undercutting their competitors, and each decision influences all future payoffs (i.e., affects the firms’ income streams), it’s possible that small-N games would tend to behave “cooperatively” (keep prices above marginal cost) without actual communication or coordination.  As N increases, the chance of at least one defection in any given round increases, and the cost of retaliation against defecting firms is more dispersed.  This suggests that markets with few firms and inelastic demand will tend to have persistent economic profits, or else will be slow to return to marginal cost pricing after market shocks, while markets with many firms or substitutes will dissipate economic profits rapidly and recover quickly from shocks.  This suggests further that the origin of competition is not inherent to markets but is in fact a result of the dispersion of the costs of strategic attempts to capture market share.
  • How does the “ownership” of decision-making authority influence both outcomes and organizational structure of firms?  This could be modeled as a centipede game, wherein players have the opportunity to sell their decision to the other player at each round.  One might expect a great willingness to do so, as it reduces strategic hazards and ultimately promotes cooperation.  The terms of such a sale are also enormously important.  For example, a series of sales at each round reflects the beginnings of the Fundamental Transformation (i.e., the tendency for firms that contract with each other often to merge).  A one-time sale of all future decision rights would reflect the endpoint of the Fundamental Transformation.  Additionally, the price point agreed upon can be seen as a signal of each players’ trust in the other.

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