Publications

Crowdsourcing Exploration
(with Y Papanastasiou and N Savva)
Forthcoming in Management Science
[abstract] [paper]

Learning and Hierarchies in Service Systems
(with M G Markakis)
Forthcoming in Management Science

[abstract] [paper]

Dynamic Learning of Patient Response Types: An Application to Treating Chronic Diseases
(with D Negoescu, M Brandeau, and D Iancu)

Forthcoming in Management Science
The paper was selected as a finalist for the 2014 Pierskalla award

[abstract] [paper]

Randomized Markdowns and Online Monitoring
(with K Moon and H Mendelson)
Forthcoming in Management Science
[abstract] [paper]

Abstract:

Online retail has reduced the cost of obtaining information about a product's price and availability. Consequently, consumers can strategically time their purchases, weighing the costs of monitoring and the risk of inventory depletion against a prospectively lower price. At the same time, firms can observe and exploit their customers' monitoring behavior. Using a dataset tracking customers of a North American specialty retail brand, we present empirical evidence that consumers are forward-looking and that monitoring products online associates with successfully obtaining discounts. We develop a structural model relating consumers' dynamic behavior to their monitoring costs and find substantial heterogeneity, with consumers' opportunity costs for an online visit ranging from $2 to $25 in inverse relation to their price elasticities. Our estimation results have important implications for retail operations. First, the randomized markdown policy observed in practice benefits retailers by combining price commitment with exploitation of the heterogeneity in consumers' monitoring costs. We estimate that the retailer's profit under randomized markdowns is 81% higher than from subgame-perfect, state-contingent pricing. Importantly, our model combines the effects of pricing and inventory management: we find that optimal inventory levels are 133% higher under the randomized markdown policy. Targeting customers with price promotions using their online histories further increases profits by 6%. The informational burden to implement targeted promotions is minimal since a simple scalar metric, the customer's purchase-to-visit ratio, captures virtually all value associated with tracking her entire online history. Lastly and counter-intuitively, reducing consumers' monitoring costs may substantially benefit the seller by intensifying the consumers' competition for the retailer's inventory.

Competitive Targeted Advertising over Networks
(with A Ozdaglar and E Yildiz
Operations Research
, 64(3): 705-720, May-June 2016
Formerly circulated as "Competing over Networks"
[abstract] [paper]

Abstract:

Recent advances in information technology have allowed firms to gather vast amounts of data regarding consumers' preferences and the structure and intensity of their social interactions. This paper examines a game-theoretic model of competition between firms which can target their marketing budgets to individuals embedded in a social network. We provide a sharp characterization of the optimal targeted advertising strategies and highlight their dependence on the underlying social network structure. Furthermore, we provide conditions under which it is optimal for the firms to asymmetrically target a subset of the individuals and establish a lower bound on the ratio of their payoffs in these asymmetric equilibria. Finally, we find that at equilibrium firms invest inefficiently high in targeted advertising and the extent of the inefficiency is increasing in the centralities of the agents they target. Taken together, these findings shed light on the effect of the network structure on the outcome of marketing competition between the firms.

Inventory Pooling under Heavy-Tailed Demand
(with M G Markakis)
Management Science, 62(6): 1800-1813, June 2016
[abstract] [paper]

Dynamics of Information Exchange in Endogenous Social Networks
(with D Acemoglu and A Ozdaglar)
Theoretical Economics, 9(1): 41-97, January 2014

[abstract] [paper]

Optimal Pricing in Networks with Externalities
(with O Candogan and A Ozdaglar)
Operations Research, 60(4): 883-905, July-August 2012
The paper appeared as an Extended Abstract at WINE 2010
[abstract] [paper]

Experimentation, Patents, and Innovation
(with D Acemoglu and A Ozdaglar)
American Economic Journal: Microeconomics, 3(1): 37-77, Feb 2011
[abstract] [paper]

Price and Capacity Competition
(with D Acemoglu and A Ozdaglar)
Games and Economic Behavior, 66(1): 1-26, May 2009
[abstract] [paper]

Working Papers

Spatial Pricing in Ride-Sharing Networks
(with O Candogan and D Saban)
Extended abstract at the NetEcon Conference
[abstract] [SSRN]

Abstract:

We explore spatial price discrimination in the context of a ride-sharing platform that serves a network of locations. Riders are heterogeneous in terms of their destination preferences and their willingness to pay for receiving service. Drivers decide whether, when, and where to provide service so as to maximize their expected earnings, given the platform's prices. Our findings highlight the impact of the demand pattern on the platform's prices, profits, and the induced consumer surplus. In particular, we establish that profits and consumer surplus are maximized when the demand pattern is “balanced” across the network's locations. In addition, we show that they both increase monotonically with the balancedness of the demand pattern (as formalized by its structural properties). Furthermore, if the demand pattern is not balanced, the platform can benefit substantially from pricing rides differently depending on the location they originate from. Finally, we consider a number of alternative pricing and compensation schemes that are commonly used in practice and explore their performance for the platform.

Managing Market Thickness in Online B2B Markets
(with W Elmaghraby, K Moon, and W Zhang)
[abstract] [Paper]

Designing Dynamic Contests
(with S Ehsani and M Mostagir)
Minor Revision in Operations Research

Extended abstract at the ACM Conference of Economics and Computation (EC)

[abstract] [paper]

Cournot Competition in Networked Markets
(with S Ehsani and R Ilkilic)
Major Revision, Management Science
Extended abstract at the ACM Conference of Economics and Computation (EC)
[abstract] [paper]

Multi-sourcing and Miscoordination in Supply Chain Networks
(with D Fearing and A Tahbaz-Salehi)
Major Revision, Operations Research
[abstract] [paper]

Information Sale and Competition
(with D Crapis and A Tahbaz Salehi)
Minor Revision, Management Science
[abstract] [paper]

Supply Disruptions and Optimal Network Structures
(with O Candogan and S Ehsani)
[abstract] [paper]

Conference Papers

Spatial Pricing in Ride-Sharing Networks, with O Candogan and D Saban
NetEcon Conference

Designing Dynamic Contests, with S Ehsani and M Mostagir
ACM Conference on Economics and Computation (EC)

Cournot Competition in Networked Markets, with S Ehsani and R Ilkilic ACM Conference on Economics and Computation (EC)

Optimal Pricing in the Presence of Local Network Effects, with O Candogan and A Ozdaglar, WINE

Forming Information Networks, with D Acemoglu and A Ozdaglar, Allerton

Communication and Learning in Social Networks: Partial Results, with D Acemoglu and A Ozdaglar, Allerton

Competition with Atomic Users, with A Ozdaglar, Asilomar

Partial Results on Capacity Competition, with D Acemoglu and A Ozdaglar, Allerton