Essays on Behavioral Market Design and Applied Microeconomic Theory
Open Access
- Author:
- Khubulashvili, Robizon
- Graduate Program:
- Economics
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- May 18, 2020
- Committee Members:
- Kalyan Chatterjee, Dissertation Advisor/Co-Advisor
Kalyan Chatterjee, Committee Chair/Co-Chair
Ran I Shorrer, Committee Chair/Co-Chair
Karl Edward Schurter, Committee Member
Chloe Jeanne Tergiman, Outside Member
Marc Albert Henry, Program Head/Chair - Keywords:
- Online gaming
online Gambling
Heterogeneity
Belief updating
R&D collaboration
win-stoppers
loss-stoppers - Abstract:
- In Chapter 1 of my dissertation -- co-authored with Ala Avoyan and Giorgi Mekerishvili, we investigate market design for online gaming platforms. Since a large part of such platforms' income is generated by advertisement, it is essential to know what influences how long users stay on the platform. We provide evidence of history-dependent stopping behavior in non-monetary environments. We find that there are two types of people: those who are more likely to stop playing after a loss; and others, who are more likely to keep playing until a win. We find that an individual's type is time-invariant over the years. We propose a behavioral dynamic choice model where utility from playing another game is directly affected by the outcome of the previous game. We structurally estimate this time non-separable preference model and conduct counterfactual analyses to evaluate alternative market designs. We find that in the context of online chess games a matching algorithm that incorporates stopping behavior can increase the length of play by 5.44%. Chapter 2 of my dissertation, studies how investors react to the arrival of new information when they are considering whether to pull out their investment or not. Proprietary data from online bookmaker shows that bettors’ (investors’) decision to cash-out their bet (investment) follows systematic patterns. To better understand how new information affects investors’ decisions, I create a new game, the "cash-out” game, and study it in the lab. I find that we can divide the population of investors into two main groups. The first group is more likely to withdraw an investment if they get good news — these investors under-interpret good news. The second group is more likely to withdraw an investment after getting negative news — these investors over-interpret bad news. Those biases in belief updating can be used by a market designer to extract larger fraction of consumer surplus by offering dynamic contract which takes into account consumer's type. In Chapter 3 of my dissertation, I investigate potential collaboration dynamics among two R&D teams called research joint venture (RJV). I showed that with observable types collaboration is sustainable for some parameter values. Next, I consider two cases with asymmetric information, in which one player's ability is observable (player A), while another player's ability is private information (player B). First, I show that if ability of player A is moderately low, RJV and first best outcome is sustainable for limited period of time but there is break up with positive probability in every equilibrium. Second, when ability of player A is very high, RJV is sustainable for some period of time but no matter what player B's actual type is there will be break up and re-establishment of the RJV with positive probability. I also designed an experiment to test theoretical predictions in the laboratory. In line with the theory prediction, I found that reputation building might lead to the break up of the RJV.