Department of Economics
579 Serra Mall
Stanford, CA 94305
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
NBER Working Papers and Publications
|September 2017||Signaling to Experts|
with Florian Scheuer: w23817
We study competitive equilibrium in a signaling economy with heterogeneously informed buyers. In terms of the classic Spence (1973) model of job market signaling, firms have access to direct but imperfect information about worker types, in addition to observing their education. Firms can be ranked according to the quality of their information, i.e. their expertise. In equilibrium, some high type workers forgo signaling and are hired by better informed firms, who make positive profits. Workers’ education decisions and firms’ use of their expertise are strategic complements, allowing for multiple equilibria. We characterize wage dispersion and the extent of signaling as a function of the distribution of expertise among firms. The market can create insufficient or excessive incentives for fir...
|February 2016||The Social Value of Financial Expertise|
I study expertise acquisition in a model of trading under asymmetric information. I propose and implement a method to estimate the ratio of social to private marginal value of expertise. This can be decomposed into three sufficient statistics: traders' average profits, the fraction of bad assets among traded assets and the elasticity of good assets traded with respect to capital inflows. For venture capital, the ratio is between 0.64 and 0.83 and for junk bond underwriting, it is between 0.09 and 0.26. In both cases this is less than one so at the margin financial expertise destroys surplus.
|April 2015||Liquidity as Social Expertise|
This paper proposes a theory of liquidity dynamics. Illiquidity results from asymmetric information. Observing the historical track record teaches agents how to interpret public information and helps overcome information asymmetry. There can be an illiquidity trap: too much asymmetric information leads to the breakdown of trade, which interrupts learning and perpetuates illiquidity. Liquidity falls in response to unexpected events that lead agents to question their valuation models, especially in newer markets, may be slow to recover after a crisis and is higher in periods of stability.
|January 2014||Testing for Information Asymmetries in Real Estate Markets|
with Johannes Stroebel: w19875
We study equilibrium outcomes in markets with asymmetric information about asset values among both buyers and sellers. In residential real estate markets hard-to-observe neighborhood characteristics are a key source of information heterogeneity: sellers are usually better informed about neighborhood values than buyers, but there are some sellers and some buyers that are better informed than their peers. We propose a new theoretical framework for analyzing such markets with many heterogeneous assets and differentially informed agents. Consistent with the predictions from this framework, we find that changes in the seller composition towards (i) more informed sellers and (ii) sellers with a larger supply elasticity predict subsequent house-price declines and demographic changes in that neigh...
Published: Pablo Kurlat & Johannes Stroebel, 2015. "Testing for Information Asymmetries in Real Estate Markets," Review of Financial Studies, Society for Financial Studies, vol. 28(8), pages 2429-2461. citation courtesy of