Agents face a coordination problem akin to the adoption of a network technology. A principal announces investment subsidies that, at minimal cost, attain a given likelihood of successful coordination. Optimal subsidies target agents who impose high externalities on others and on whom others...

In many economic, political, and social situations, circumstances change at random points in time, reacting is costly, and reactions appropriate to present circumstances may become inappropriate upon future changes, requiring further costly reaction. Waiting is informative if arrival of the next...

We offer a theory of polarization as an optimal response to ambiguity. Suppose individual A's beliefs first-order stochastically dominate individual B's. They observe a common signal. They exhibit polarization if A's posterior dominates her prior and B's prior dominates her posterior. Given...

We model the strategic provision of advice in environments where a principal's optimal action depends on an unobserved, binary state of interest. Experts receive signals about the state and each recommends an action. The principal and all experts dislike making errors in their decision and...

We study the design of informational environments in settings where generating information is costly. We assume that the cost of a signal is proportional to the expected reduction in uncertainty. We show that Kamenica & Gentzkow's (2011) concavification approach to characterizing optimal signals...

We study a uniform-price auction where k identical common-value objects are allocated amongst z k bidders who have imperfect signals about the state of the world. The common valuation is determined jointly by the state and an action that is chosen after winning an object. In large auctions,...

We develop a new methodology to estimate herd behavior in financial markets. We build a model of informational herding that can be estimated with financial transaction data. In the model, rational herding arises because of information-event uncertainty. We estimate the model using data on a NYSE...

The payoff of actions is estimated and the resulting empirical payoff is controlled for in regression analyses to formulate a test of rational expectations in information cascade experiments. We show that the empirical payoff of actions is a function of estimates of choice probabilities and...

This paper makes a first attempt at building a theory of interim Bayesian persuasion. I work in a minimalist model where a low or high type sender seeks validation from a receiver who is willing to validate high types exclusively. After learning her type, the sender chooses a complete...

Adaptive Coding is the property of the brain to adjust its response to statistical properties of the environment. Its effect is an improved discrimination among signals under the constraints on the dynamic range of its response. It can thus be considered the neural correspondent of Rational...