Research

Publication

Targeted Search with Horizontal Differentiation in the Marriage Market (with Huangxing Yang)  [PDF]
          Forthcoming: Journal of Economic Behavior & Organization
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Abstract: We develop a search/matching model in the marriage market with heterogeneous men (a continuum of types) and heterogeneous women (a finite number of types). The model has two distinguishing features. First, men and women are also horizontally differentiated. Second, the search is targeted: each type of woman constitutes a distinctive submarket, and men are able to choose beforehand in which submarkets to participate, but the search is random within each submarket. We show that there is always a unique equilibrium in which men are endogenously segmented into different submarkets, and that the equilibrium matching pattern is weakly positive assortative. We then explore how the equilibrium marriage pattern changes horizontally and vertically as some exogenous shocks occur. In particular, we show that an Internet-induced increase in search efficiency would make the marriage pattern overall more assortative, while an increase in the dispersion of the horizontal match fitness could make the marriage pattern overall less assortative.

Working Papers

Inter-Dealer Trades in OTC Markets — Who Buys and Who Sells?  (with Chung-Yi Tse) [PDF]
            R&R: Review of Economic Dynamics

​Abstract: Dealers in an OTC market can obviously only carry limited quantities of the asset over time and the inventory capacities among dealers may certainly be different. In this environment, dealers trade among themselves, whenever the opportunities arise, to rebalance inventories for facilitating the sale and purchase of the asset to and from investors. In equilibrium, the small-capacity dealers sell to the large-capacity dealers when the asset supply is at a low level but buy from them when the asset supply is at a high level. It is the small-capacity dealers who trade to provide immediacy for the large-capacity dealers -- a prediction, though counterintuitive, is supported by some available empirical evidence.


Dinosaur Judges: Conservative Experts in a Changing Society (with Kim-Sau Chung) [PDF]
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Abstract: Modern societies thrive on the advices of experts in a garden variety of areas. How do we identify these experts? In circumstances where an expert’s track record cannot be easily assessed by the general public, our society relies on peer reviews from “known” experts to identify new experts. This gives rise to an aristocratic expert class that is inevitably conservative. Young scholars, in order to earn the approval of old “known” experts, have incentives to study old subjects or follow old schools of thought at the expenses of new subjects and new schools of thought that would have better served a changing society. Our society tradeoffs conservatism against competence in its endeavor to identify experts, but the optimal tradeoff may not be achieved due to time-inconsistency. We formalize this problem with a model described in terms of legal experts such as lawyers and judges, and use it to shed light on noise voters and anti-intellectualism in the Trumpian era.​

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​Unobservable Investments and Search Frictions  [PDF] 

Abstract: This paper studies investment incentives in a dynamic random search environment, where a seller entrant can make unobservable investments to decrease the production cost. In the unique steady state equilibrium, sellers play a mixed strategy over investments and buyers play a mixed strategy over prices. When buyers make take-it-or-leave-it offers, the equilibrium payoffs and social welfare are constant given any search friction and equal to the equilibrium values when investments are observable (indicating no investment). This novel property remains true even when the investment strategy becomes socially optimal as search frictions diminish.
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Search with Private Information: Sorting and Convergence to Perfect Competition (with Kenneth Mirkin)   [PDF]

Abstract: Consider a dynamic market where heterogeneous buyers and sellers are randomly paired in each period.  Within each match, seller types become observable while buyer types remain private information, and  sellers make take-it-or-leave-it offers. We first establish the existence of steady state equilibrium and then characterize properties of sorting given two extreme search frictions.  When agents completely disregard for future payoffs, a stronger condition of log-supermodularity (log-submodularity) of the production function is necessary and sufficient for positive (negative) assortative matching.  When search frictions vanish, the condition for positive (negative) sorting returns to supermodularity (submodularity). In this setting with interdependent valuations, we demonstrate that as search frictions diminish to zero, search equilibria converge to perfect competition.


Patents and Allocation of Resources over Innovation Projects [coming soon]

Work in Progress

Dating and Divorce (with Hao Li and Sergei Severinov)
Non-Linear Pricing with Limited Commitment (with Menghan Xu)

Teaching

Current Teaching

Econ 2101/2210, "Intermediate Microeconomics", for undergraduate students, HKU
Econ 1001/1210, "Introductory Microeconomics", for undergraduate students, HKU
Econ 6002, "Selected Topics in Microeconomics", for PhD students, HKU

Instructor

Econ 106G, "Introduction to Game Theory", UCLA