Publications

Crowdsourcing Exploration
(with Y Papanastasiou and N Savva)
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]

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)
Forthcoming in Management Science
[abstract] [paper]

Abstract:

Risk pooling has been extensively studied in the operations management literature as the basic driver behind strategies such as transshipment, manufacturing flexibility, component commonality, and drop-shipping. This paper explores the benefits of pooling in the context of inventory management using the canonical model first studied in Eppen(1979). Specifically, we consider a single-period multi-location newsvendor model, where different locations face independent and identically distributed demands and linear holding and backorder costs. We show that Eppen's celebrated result, i.e., that the cost savings from centralized inventory management scale with the square root of the number of locations, depends critically on the "light-tailed" nature of the demand uncertainty. In particular, we establish that the relative benefits of risk pooling for a class of heavy-tailed demand distributions (stable distributions) scale as n(α-1)/α, i.e., lower than √n predicted for normally distributed demands, where α ∈ (1,2] is a parameter that captures the shape of the distribution's tail. Furthermore, we discuss the implications of our findings for the performance of periodic-review policies in multi-period inventory management as well as for the profits associated with drop-shipping fulfillment strategies. Paired with an extensive simulation analysis, these results highlight the importance of taking into account the shape of the tail of the demand uncertainty when considering implementing a risk-pooling strategy.

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

[abstract] [paper]

Abstract:

We develop a model of information exchange through communication and investigate its implications for information aggregation in large societies. An underlying state determines payoffs from different actions. Agents decide which others to form a costly communication link with, incurring the associated cost. After receiving a private signal correlated with the underlying state, they exchange information over the induced communication network until taking an (irreversible) action. We define asymptotic learning as the fraction of agents taking the correct action converging to one as a society grows large. Under truthful communication, we show that asymptotic learning occurs if (and under some additional conditions, also only if) in the induced communication network most agents are a short distance away from "information hubs", which receive and distribute a large amount of information. Asymptotic learning therefore requires information to be aggregated in the hands of a few agents. We also show that while truthful communication may not always be a best response, it is an equilibrium when the communication network induces asymptotic learning. Moreover, we contrast equilibrium behavior with a socially optimal strategy profile, i.e., a profile that maximizes aggregate welfare. We show that when the network induces asymptotic learning, equilibrium behavior leads to maximum aggregate welfare, but this may not be the case when asymptotic learning does not occur. We then provide a systematic investigation of what types of cost structures and associated social cliques (consisting of groups of individuals linked to each other at zero cost, such as friendship networks) ensure the emergence of communication networks that lead to asymptotic learning. Our result shows that societies with too many and sufficiently large social cliques do not induce asymptotic learning, because each social clique would have sufficient information by itself, making communication with others relatively unattractive. Asymptotic learning results either if social cliques are not too large, in which case communication across cliques is encouraged, or if there exist very large cliques that act as information hubs.

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)
[abstract] [paper] [SSRN]

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]

Abstract:

The paper considers a model of competition among firms that produce a homogeneous good in a networked environment. A bipartite graph determines which subset of markets a firm can supply to. Firms compete in Cournot and decide how to allocate their production output to the markets they are directly connected to. We provide a characterization of the production quantities at the unique equilibrium of the resulting game for any given network. Our results identify a novel connection between the equilibrium outcome and supply paths in the underlying network structure. We then proceed to study the impact of changes in the competition structure, e.g., due to a firm expanding into a new market or two firms merging, on firms' profits and consumer welfare. The modeling framework we propose can be used in assessing whether expanding in a new market is profitable for a firm, identifying opportunities for collaboration, e.g., a merger, joint venture, or acquisition, between competing firms, and guiding regulatory action in the context of market design and antitrust analysis.

Designing Dynamic Contests
(with S Ehsani and M Mostagir
Major Revision, Operations Research

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]

Selling Information in Oligopolies
(with D Crapis and A Tahbaz Salehi)
Major Revision, Management Science
[abstract] [paper]

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

Conference Papers

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