Propagation and Deterrence of Unpunishable Collusion in Networks 
​Previously named: Non-cooperative Bargaining and Collusion Formation Through Communication Networks. 
(Under review)

Presentation Slides

SSRN https://ssrn.com/abstract=4568811

Interpersonal collusion poses risks to organizations when members exploit loopholes or abuse power for personal gain. This paper studies a common type of collusion in which, if successfully organized, colluding members can avoid all potential punishments because they can manipulate evidence of misconduct and cover up for each other. In this paper, I introduce a novel bargaining model based on personal networks, which shows that star and ring networks are the most resistant to collusion. I also provide an algorithm that characterizes the feasibility of collusion in arbitrary networks under budget constraints. Finally, I propose a new centrality measure that helps identify pivotal agents, offering practical insights for anti-corruption, antitrust, organizational design, and political bargaining.

Earning a good reputation is crucial for the survival of new firms on online retailing and service platforms. With a dynamic price signaling model, we show that a high-quality firm can signal its unobserved quality by setting a lower introductory price than its low-quality counterpart. After accumulating sufficient favorable reviews, the high-quality firm will raise its price and enjoy a quality premium. Using data from Zaihang, a consulting service platform, we find empirical evidence that experts with high unobserved ability indeed adopt low introductory prices and exhibit a rising price dynamic over time. We use the performance of the expert on another platform as an instrument for the expert's ability on Zaihang to provide evidence that the relationship is causal. Our empirical findings reject alternative models in which firms do not know their own types, or consumers can observe firm types.

A BEHAVIORAL APPROACH TO DURABILITY CHOICE, NEW-PRODUCT INTRODUCTIONS, AND PLANNED OBSOLESCENCE 

Observation of real-world markets suggests that many products are produced at below efficient built-in durability levels, and/or new products are introduced quickly which inefficiently reduces the useful life of durable products.  Most of the prior literature on this subject explains these observations employing monopoly/market power models, but a number of the markets that exhibit these behaviors are competitive.  We consider models in which consumers have time-inconsistent/present-biased preferences, as first put forth in the seminal analysis of Strotz (1955), and show that present-biased consumer preferences can lead to equilibrium durability below efficient levels and inefficiently quick new-product introductions, even in competitive markets.  We also investigate circumstances in which market power aggravates these distortions.  In addition to deriving these theoretical results, we relate our theory to recent regulatory changes in the light bulb industry, as well as to the behavior of the well-known Phoebus light bulb cartel of the 1920s and 1930s.