Students on the Job Market and Placement Record

Students on the Job Market

Run LI

Job Market Paper: Persuasion with Strategic Reporting

Research Interests: Microeconomic Theory: Bayesian Persuasion; Communication Games; Disclosure

Zhongchao YANG

Job Market Paper: A Double-edged Sword: Information Disclosure in Credit Market with Moral Hazard

Research Interests: Macroeconomics, Finance, Information Theory, Quantitative Economics

Detailed Job Canadidate Profiles

Run LI

Job Market Paper:

Persuasion with Strategic Reporting

Abstract:

We consider strategic and costly reporting in Bayesian persuasion. After privately observing a result from an experiment he designs, a sender strategically reports the result to a receiver to influence her action. This re- porting incurs a cost that depends on both the result of the experiment and the message the sender reports. Based on the unique sequential equilibrium selected by the D1 criterion in a signaling subgame with a given experiment, we show that an optimal experiment always exists. Furthermore, the optimal experiment may lead to full or partial (or no) information transmission de- pending mainly on the shapes of the cost function. When the cost function is not convex and truthful reporting is costly, we find that the sender may ex ante strictly prefer strategic reporting over fully committing to truthful reporting even if truthful reporting enables him to minimize the reporting cost for any realized result.

Research Interests: Microeconomic Theory: Bayesian Persuasion; Communication Games; Disclosure

Personal Website: https://lirun20.wixsite.com/lirun

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Zhongchao YANG

Job Market Paper

A Double-edged Sword: Information Disclosure in Credit Market with Moral Hazard

Abstract:

I study a regulator's optimal information disclosure in a credit market with moral hazard (e.g. stress tests in banking sector). The key insight of our model is that information disclosure can be used to mitigate moral hazard problem.  While imprecise disclosure can lead to the collapse of credit market, disclosing too much information can aggravate the moral hazard problem.  Therefore, the optimal information disclosure is neither too vague nor too precise.  In addition, information disclosure faces a quality and quantity trade-off: it can either induce fewer banks to choose more efficient projects (quality regime) or induce more banks to choose less efficient projects(quantity regime). The quality and quantity trade-off is non-monotone over banks' debt ratio. In particular, we show a case where, as banks' debt ratio increases, the optimal disclosure regime changes from quantity to quality and finally back to quantity.  Therefore, when the economy is struck by a negative shock such that banks need more external finance, there exists two regime switch cases: if optimal regime changes from quality to quantity, less precise disclosure can increase social welfare; otherwise, more precise disclosure should be adopted.

Research Interests: Macroeconomics, Finance, Information Theory, Quantitative Economics

Personal website: http://zyangam.wixsite.com/mysite

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Placement Record