Professor of Finance
WORKING PAPERS
R&R and The Review of Economic Studies (with Cyrus Mevorach and Curtis Taylor)
We explore the interaction of consumer stockpiling with monopoly pricing and buffer stock inventory choice in the face of a supply disruption. Consumers ability to stockpile the good induces the firm to raise the price sooner (on average) in response to a supply shock, which leads to a reduction in firm profits. Perhaps surisingly, consumer's can also be worse off when they have the ability to stockpile. The social optimum can be restored with strategic reserves, but not with price controls or rationing. [Slides]
Working Paper (with Paul Gertler, Renping Li, and David Sraer)
Pay-as-you-go (PAYGo) financing is a novel financial contract that has recently become a popular form of credit. PAYGo financing relies on technology that enables the lender to cheaply and remotely disable the flow benefits of collateral when the borrower misses payments. This paper quantifies the welfare implications of PAYGo financing. We develop a dynamic structural model of consumers and estimate the model using a multi-arm, large-scale pricing experiment conducted by a fintech lender that offers PAYGo financing for smartphones. We find that the welfare gain from access to PAYGo financing is equivalent to a significant increase in income while remaining highly profitable for the lender. [Slides]
Working Paper (with Alexander S. Gorbenko and Shreye Mirani)
In merger contests, price isn’t everything. Using a new hand-collected dataset of U.S. mergers, we show that non-price deal terms are pervasive, differ sharply across bidder types, and often determine the winner—even when the highest price loses. A structural model reveals that these terms carry substantial economic value for targets and are central to merger outcomes.
WHEN ARE TWO HEADS BETTER THAN ONE? THE ORGANIZATIONAL DESIGN OF INNOVATION
Coming Soon (with Felix Z. Feng, Curtis. R. Taylor, and Mark Westerfield)
How should innovation be organized over time? We study a dynamic model of discovery with complementary research and development tasks, moral hazard, and privately observed discovery quality. We characterize when assigning both tasks to a solo innovator is optimal and when a team-based structure dominates, and show how the optimal allocation of tasks can shift over the project’s life cycle as incentives and information frictions evolve.