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Essays on Endogenous Information Acquisition in Economics
Ilinov, Pavel ; Steiner, Jakub (advisor) ; Kováč, Eugen (referee) ; Michelucci, Fabio (referee)
English Abstracts Pavel Ilinov 1 First Chapter In the first chapter we consider two types of models: (i) a rational inattention problem and (ii) a conformity game, in which fully informed players find it costly to deviate from average behavior. We show that these problems are equivalent to each other, both from the perspective of the participant and the outside observer: each individual faces identical trade-offs in both situations, and an observer would not be able to distinguish the two models from the choice data they generate. We also establish when individual behavior in the conformity game maximizes welfare. 2 Second Chapter The second chapter shows that the principal can strictly benefit from delegating a decision to an agent whose opinion differs from that of the principal. We consider a "delegated expertise" problem in which the agent has an advantage in information acquisition relative to the principal, rather than having preexisting private information. When the principal is ex ante predisposed towards some action, it is optimal for her to hire an agent who is predisposed towards the same action, but to a lesser extent, since such an agent would acquire more information, which outweighs the bias stemming from misalignment. We show that belief misalignment between an agent and a principal is a...
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Essays on Economics of Advertising
Valei, Azamat ; Žigić, Krešimir (advisor) ; Etro, Federico (referee) ; Kováč, Eugen (referee)
The dissertation studies two topics in economics of advertising in the framework of Industrial Organization. Particularly, it considers a role of advertising in the markets with network externalities in consumption and advertising as a strategic response of incumbent to new entry. The first chapter investigates the incentives for a monopolistic firm producing a good with network externalities to advertise when consumers face imperfect information and therefore must search to realize their actual willingness to pay for this good. A firm may disclose market information through advertising if it finds it beneficial. The results suggest that advertising is more likely in the case of a negative network effect and less likely with a positive network effect. When a monopolist faces a strong network externality, it chooses to support a maximum possible network and charge a price equal to the value of the externality. Finally, depending on the value of the search cost and the type of the network externality, a monopolist may use different advertising content: no information, price information only, product characteristics or both price and product characteristics. Specifically, if all consumers have the same search cost, as the search cost grows the firm must include more information in the advertising content....
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Essays on Vertically Differentiated Markets for Complementary Goods
Burlakov, Georgi ; Žigić, Krešimir (advisor) ; Giannakas, Konstantinos (referee) ; Kováč, Eugen (referee)
The purpose of this thesis is to shed light on how product complementarity affects the variety of possible equilibrium outcomes in a vertically differentiated market. Complementarity is not uncommon. Many vertically differentiated goods have value for the consumer as complements, that is only if they are used in combination with other goods which can also be of different qualities (e.g. piano with tuning service, business trip with hotel accommodation, computing platform with web browsing application, etc.). Complementarity between goods brings an exogenous expense that the consumer must pay on top of the price of any of the goods available in a vertically differentiated market. However, firms are only partially able to compensate consumers for the exogenous expense by charging lower prices. Some might also be prompted to increase the qualities of their goods. Then, however, the general validity of the maximum-differentiation choice cannot be taken for granted as in the classical no-complementarity case. How many firms will have positive market shares and whether they will serve all consumers at equilibrium cannot be decided based only on the distribution of the consumer identification characteristic~(income or taste). By taking this into account, this thesis reveals a set of possible equilibrium...
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