Working Papers

"Performance Evaluation and Collaboration Matching between Industry and Academic" (Job Market Paper)


Abstract: I study collaborations between high-tech companies and academics using a theoretical two-sided matching model with moral hazard. I take the pharma-academic alliances as one particular example. The academic's effort determines the future probability of success. This outcome is not contractual, but in an interim stage, the company receives a signal (from an evaluation) on the prospects of the output. This signal allows the company to decide whether to abandon the project and is used to motivate the academic. The equilibrium consists of a menu of incentive contracts and matching between firms and academics. I consider different evaluation technology and show the implications on the equilibrium matching. I show that the equilibrium matching is unique and can be positive assortative (PAM) or negative assortative (NAM) determined by the firms' evaluation technology. Moreover, when considering the matching market, a better academic's payment could be lower because she is matched with a lower-paid company, and motivating her to exert a sufficient effort does not require a higher payoff. I also discuss the results in different setups.

"Similar-to-me Effects in the Grant Application Process: Applicants, Panelists, and the Likelihood of Obtaining Funds"

Joint with Albert Banal-Estañol, Inés Macho-Stadler, and David Pérez-Castrillo


Abstract: We analyze if and how the characteristics of grant research panels affect the applicants’ likelihood of obtaining funding and, especially, if particular types of panels favor particular types of applicants. We use the award decisions of the UK’s Engineering and Physical Sciences Research Council (EPSRC). We show that not only the applicants' but also the panels' characteristics matter. Panels of higher quality, in terms of prior research performance, for instance, as well panels that include more female members or members of Asian origin, are tougher than others. Our main results indicate that panel members tend to favor more (or penalize less) applicants with similar characteristics to them, as the similar-to-me hypothesis suggests. We show, for instance, that the quality of the applicants is more critical for panels of high quality than for panels of relatively lower quality, that basic-oriented panels tend to penalize applied-oriented applicants, and that panels with fewer female members tend to penalize teams with more female applicants.

"The Impact of Consumers’ Regret on Firms’ Decisions in a Durable Good Market"


Abstract: I consider a durable good market, where the incumbent sells the old version of a product in two periods, and an entrant introduces an improved version in the second period. Consumers do not know their valuations of the new version. They experience action regret if they buy the old version in the first period, and afterward, realize that they appreciate the new version more. They experience inaction regret if they wait for the new version and realize that they do not enjoy the new features. Consumers anticipate the potential regret, which influences their purchase decisions and affects firms’ price-setting decisions and profits. The anticipation of action (inaction) regret always benefits (harms) the entrant. The regret has opposite effects on the incumbent's period 1 and period 2 profits, for instance, the action regret decreases its profit in period 1 but increases that in period 2, which may yield the incumbent's total profit to increase, decrease, or have a U-shape. I also discuss the robustness of my results in different setups.