Credence goods markets are characterized by pronounced informational asymmetries between consumers and expert sellers. As a consequence, consumers are often exploited and market efficiency is threatened. However, in the digital age, it has become easy and cheap for consumers to self-diagnose...

Individuals use narratives as rationales or justifications to make their claims more convincing. I provide a general framework for partial verifiability based on narratives. Narratives give many reasons and arguments. The receiver derives the message's meaning by aggregating these reasons; her...

Before embarking on a project, a principal must often rely on an agent to learn about its profitability. We model this learning as a two-armed bandit problem and highlight the interaction between learning (experimentation) and production. We derive the optimal contract for both experimentation...

Recent literature has shown that lying behavior in the laboratory can well be explained by a combination of lying costs and reputation concerns. We extend the literature on lying behavior to strategic interactions. As reciprocal behavior is important in many interactions, we study a theoretical...

Unfavorable news are often delivered under the disguise of vagueness. But are people sufficiently naive to be fooled by such positive spin? We use a theoretical model and a laboratory experiment to study the strategic use of vagueness in a voluntary disclosure game. Consider a sender who aims at...

We study the optimal entry fee in a symmetric private value first-price auction with signaling, in which the participation decisions and the auction outcome are used by an outside observer to infer the bidders’ types. We show that this auction has a unique fully separating equilibrium bidding...

Asymmetric information can distort market outcomes. I study how the online disclosure of information affects consumers’ behavior and firms’ incentives to upgrade product quality in markets where information is traditionally limited. I first build a model of consumer search with firms’...

Advantageous (or propitious) selection occurs when an increase in the premium of an insurance contract induces high-cost agents to quit, thereby reducing the average cost among remaining buyers. Hemenway (1990) and many subsequent contributions motivate its advent by differences in risk-aversion...

Evidence suggests that participants in direct student-proposing deferred-acceptance mechanisms (DA) play dominated strategies. To explain the data, we introduce expectation-based loss aversion into a school-choice setting and characterize choice-acclimating personal equilibria in DA. We find...

Reporting private information is a key part of economic decision making. A recent literature has found that many people have a preference for honest reporting, contrary to usual economic assumptions. In this paper, we investigate whether preferences for honesty are malleable and what determines...