Welcome to my site! I am an Assistant Professor in Economics at Africa Business School, UM6P. My research focuses on applications of game theory, in particular, mechanism design, auctions, and information economics. Prior to Liverpool I have worked in Martin Hellwig's team at the Max Planck Institute for Research on Collective Goods in Bonn, and held a visiting position at the Cowles Foundation at Yale University. I earned my Ph.D at Toulouse School of Economics under the supervision of David Martimort. I hold a Master's degree from the New Economic School and a Bachelor's degree from Moscow State University.
Solving the verifier's dilemma in quorum-based blockchain consensus: A game theory approach
Forthcoming in Conference Proceedings of AAMAS 2024, with R. Laraki and M. Reynouard
This paper presents a novel solution concept, called BAR Nash Equilibrium (BARNE) and apply it to analyse the Verifier's dilemma, a fundamental problem in blockchain. Our solution concept adapts the Nash equilibrium (NE) to accommodate interactions among Byzantine, altruistic and rational agents, which became known as the BAR setting in the literature. We prove the existence of BARNE in a large class of games and introduce two natural refinements, global and local stability. Using this equilibrium and its refinement, we analyse the free-rider problem in the context of byzantine consensus. We demonstrate that by incorporating fines and forced errors into a standard quorum-based blockchain protocol, we can effectively reestablish honest behavior as a globally stable BARNE.
Economic value in the Brain: A meta-analysis of willingness-to-pay using the Becker-DeGroot-Marschak auction
[PLoS ONE, 2023], with A. Newton-Fenner et al.
Forming and comparing subjective values (SVs) of choice options is a critical stage of decision-making. Previous studies have highlighted a complex network of brain regions involved in this process by utilising a diverse range of tasks and stimuli, varying in economic, hedonic and sensory qualities. However, the heterogeneity of tasks and sensory modalities may systematically confound the set of regions mediating the SVs of goods. To identify and delineate the core brain valuation system involved in processing SV, we utilised the Becker-DeGroot-Marschak (BDM) auction, an incentivised demand-revealing mechanism which quantifies SV through the economic metric of willingness-to-pay (WTP). A coordinate-based activation likelihood estimation meta-analysis analysed twenty-four fMRI studies employing a BDM task (731 participants; 190 foci). Using an additional contrast analysis, we also investigated whether this encoding of SV would be invariant to the concurrency of auction task and fMRI recordings. A fail-safe number analysis was conducted to explore potential publication bias. WTP positively correlated with fMRI-BOLD activations in the left ventromedial prefrontal cortex with a sub-cluster extending into anterior cingulate cortex, bilateral ventral striatum, right dorsolateral prefrontal cortex, right inferior frontal gyrus, and right anterior insula. Contrast analysis identified preferential engagement of the mentalizing-related structures in response to concurrent scanning. Together, our findings offer succinct empirical support for the core structures participating in the formation of SV, separate from the hedonic aspects of reward and evaluated in terms of WTP using BDM, and show the selective involvement of inhibition-related brain structures during active valuation.
A comparison of reward processing during Becker–DeGroot–Marschak and Vickrey auctions: An ERP study
[Psychophysiology, 2023], with A. Newton-Fenner et al.
Vickrey auctions (VA) and Becker–DeGroot–Marschak auctions (BDM) are strategically equivalent demand-revealing mechanisms, differentiated only by a human opponent in the VA, and a random-number-generator opponent in the BDM. Game parameters are such that players are incentivized to reveal their private subjective values (SV) and behavior should be identical in both tasks. However, this has been repeatedly shown not to be the case. In this study, the neural correlates of outcome feedback processing during VA and BDM were directly compared using electroencephalography. Twenty-eight healthy participants bid for household products which were then divided into high- and low-SV categories. The VA included a human opponent deception to induce a social environment, while in reality a random-number-generator was used in both tasks. A P3 component peaking at 336 ms over midline parietal sites showed more positive amplitudes for high bid values, and for win outcomes in the VA but not the BDM. Both auctions also elicited a Reward Positivity potential, maximal at 275 ms along the central midline electrodes, that was not modulated by auction task or SV. Further, an exploratory N170 potential in the right occipitotemporal electrodes and a vertex positive potential component were stronger in the VA relative to the BDM. Results point to an enhanced cortical response to bid outcomes during VA task in a potential component associated with emotional control, and to the occurrence of face-sensitive potentials in VA but not in BDM auction. These findings suggest modulation of bid outcome processing by the social-competitive aspect of auction tasks. Directly comparing two prominent auction paradigms affords the opportunity to isolate the impact of social environment on competitive, risky decision-making. Findings suggest that feedback processing as early as 176 ms is facilitated by the presence of a human competitor, and later processing is modulated by social context and subjective value.
This paper explores the effects of the straight-ticket voting option (STVO) on the positions of politicians. STVO, present in some U.S. states, allows voters to select one party for all partisan elections listed on the ballot, as opposed to filling out each office individually. We analyze the effects of STVO on policy-making by building a model of pre-election competition. STVO results in greater party loyalty of candidates, while increasing the weight of non-partisan voters' positions in candidate selection. This induces an asymmetric effect on winning probabilities and implemented policies in the two-party system.
Keywords: Ballot Design, Elections, Political Positions.
Bid outcome processing in Vickrey Auctions: An ERP Study
[Psychophysiology, 2022] with A. Newton-Fenner et al.
Online retailers often sell products using a socially competitive second-price sealed-bid auction known as a Vickrey auction (VA), an incentivized demand-revealing mechanism used to elicit players' subjective values. The VA presents a situation of risky decision-making, which typically implements value processing and a loss aversion mechanism. Neural outcome processing of VA bids are not known; this study explores this for the first time using EEG. Twenty-eight healthy participants bid on household items against an anonymous, computerized opponent. Bid outcome event-related potentials were predicted to differentiate between three conditions: outbid (no-win), large margin win (bargain), and small margin win (snatch). Individual loss aversion values were evaluated in a separate behavioral experiment offering gains or losses of variable amounts but equal chances against an assured gain. Processing outcomes of VA bids were associated with a feedback-related negativity (FRN) potential with a spatial maximum at the vertex (251–271 ms), where bargain win trials resulted in greater FRN amplitudes than snatch win trials. Additionally, a P300 potential was sensitive to win versus no-win outcomes and to retail price. Individual loss aversion level did not correlate with the strength of FRN or P300. Results show that outcome processing in a VA is associated with FRN that differentiates between relatively advantageous and less advantageous gains, and a P300 that distinguishes between the more and less expensive auction items. Our findings pave the way to an objective exploration of economic decision-making and purchasing behavior involving a widely popular auction.
Selling 'Money' on eBay: A Field Study of Surplus Division
We study the division of trade surplus in a competitive market environment by conducting a natural field experiment on German eBay. Acting as a seller, we offer Amazon gift cards with face values of up to 500 Euro. Randomly arriving buyers, the subjects of our experiment, make price offers according to eBay rules. Using a novel decomposition method, we infer offered shares of trade surplus and find that the average share proposed to the seller amounts to 29%. Additionally, we document: (i) insignificant effects of stake size; (ii) poor use of strategically relevant public information; and (iii) behavioural differences between East and West German subjects.
Keywords: Field Experiment, Ultimatum Game, Surplus Division, Bargaining, Internet Trade, eBay.
The Expected Externality Mechanism in a Level-k Environment
Mechanism design theory relies on the concept of Nash equilibrium. However, studies of experimental games suggest that Nash equilibria are rarely played and provide evidence that subjects may be thinking only a finite number of iterations. Our purpose is to find out whether the expected externality mechanism (D'Aspremont, Gerard-Varet, 1979) retains its properties under finite-iterations thinking. While efficient implementation fails under certain conditions, our results provide a vindication of the mechanism in the convex quasi-linear environment with finitely rational agents.
Keywords: Expected Externality Mechanism, Level-k Model, Bounded Rationality.
Information Aggregation through Stock Prices and the Cost of Debt
This paper studies a firm’s optimal capital structure in an environment, where the firm’s stock price serves as a public signal for its credit worthiness. In equilibrium, equity investors choose how much information to acquire privately, which induces a positive relation between the amount of equity issued and the stock price signal’s precision. Thus, through its capital structure, the firm can internalize the informational externality that stock prices exert on bond yields. Firms with a strong fundamental therefore issue more equity and less debt than they would if the informational spill-over did not exist.
Keywords: Information Aggregation, Capital Structure, Sequential Markets, Market Depth.
Collusion via Information Sharing and Optimal Auctions
This paper studies collusion via information sharing in the context of auctions. The model of collusion via information sharing builds on Aumann’s (1976) description of knowledge. Robustness of auction mechanisms to collusion via information sharing is defined as the impossibility of an agreement to collude. A cartel can agree to collude on a contract if it is common knowledge within that cartel that the contract is incentive compatible and individually rational. Robust mechanisms are characterized in a number of settings where some, all, or no bidders are bound by limited liability. Finally, the characterization is used in a simple IPV setting to design a mechanism that is both optimal and robust to collusion.
Keywords: Bidder collusion, mechanism design, communication design, no-trade theorem.
Individuals often have to decide to which degree of risk they want to expose others, or how much risk to accept if their choice has an externality on third parties. One typical application is a household. We exploit the opportunity to run an experiment in the German Socio-Economic Panel with two members from 494 households. Participants have a good estimate of each other’s risk preferences, even if not explicitly informed. They do not simply match this preference when deciding on behalf of the other household member, but shy away from exposing others to risk. We model the situation, and we find four distinct types of individuals, and two distinct types of households.
Keywords: SOEP-IS, Risk Attitudes, Aggregation of Preferences, Household Decision Making.
We investigate the impact a straight-ticket voting option—a.k.a. the Master Lever—has on U.S. senators’ roll-call voting records in Congress. Using a difference-in-differences framework, we find the Master Lever leads to a 3–6 percent rightward shift in senators’ policy positions. The effect is largely driven by the Republican party. To interpret our results, we analyse the Master Lever’s impact on electoral incentives and outcomes. Our findings suggest that ballot design has a non-negligible impact on policy-making. They also imply that electoral outcomes in moderate to right-leaning Master Lever states may be especially vulnerable to right-wing, non-partisan voters.
Keywords: Ballot Design, Elections, Political Positions, U.S. Senate.
This paper introduces a virtually efficient mechanism in a setting with sequentially arriving agents who hold informative signals about future type distributions. To reveal the information the principal organizes betting on future type reports. An agent’s betting reward depends on how accurately the prior updated on his report predicts the type reports observed in the following period. The mechanism satisfies participation constraints and generates no deficit after any reported history.
Keywords: Dynamic Mechanisms, Scoring Rule, Bayesian Learning, Conjugate Priors.
I study collusion in one-shot auctions, where a buyer can bribe his competitors into lowering their bids. I modify the single-unit Vickrey auction to incite deviations from the designated-winner scenario and thus undermine collusion. The construction of mechanism does not require the knowledge of the colluding bidders’ identities or distributions of valuations, in which sense it is entirely detail-free.
Keywords: Bidder Collusion, Detail-Free Auctions, Vickrey Auction.
Collusive bidding in auctions jeopardizes the revenue to the seller. This paper describes a way to preclude strong and tacit subgroup collusion in a non-repeated auction environment, when cartels can commit to transfer exchange ex post, but not to reallocation. The robustness is attained by an optional assignment rule in a sealed-bid Vickrey auction, which is not applied in equilibrium, but serves as a credible threat to any collusive agreement aimed at generating an extra surplus. In the absence of benefits to collusion the backward-inducing bidders will not engage into collusive negotiations.
Keywords: Acceptable Correlated Equilibrium, Collusion, Detail-Free Auctions.