Professor of Finance
WORKING PAPERS
Working Paper (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 5.8% increase in income while remaining highly profitable for the lender. [Slides]