Working Papers:

Conforming to Stand Out: A Model of Career Concerns with Biased Experts

Abstract: A decision maker acts over two periods on the advice of two imperfectly informed experts. Both experts are possibly biased, but in opposite directions. The decision maker can only rely on the experts' reports to determine a course of action, as he never observes the true state of the economy. I show that the experts report in the opposite direction of their possible bias not only for reputational reasons, but also as a strategic response to the possibility of misreporting by their counterpart. This model also provides a new justification for conformity: an expert might send the same message as the other, not in order to look similar, but to distinguish herself. This is done by inviting comparison to the reliability of the other expert. The model is applicable to several situations: for instance when leaders from opposing political parties propose policies to the electorate or when the CEO of a company asks two employees to evaluate how a task was performed by one of them.

Corporate Governance with Social Ties

Abstract: This paper studies incentives in organizations where social connections can be operationalized for business gain, with novel implications for corporate governance. The model involves two-layers of moral hazard, where a manager acts simultaneously as an agent to an investor and as a principal to the stakeholders of the firm. The manager's role is to determine the allocation of the uncontractible portion of resources at his discretion. The stakeholders participate in the success of the project by forming productive social ties. The optimal executive compensation offered by the investor must take into account the ease with which stakeholders form social connections but also the trade-offs that arise in the process of committing resources. The model offers a plausible mechanism that relates social characteristics to the emergence of different forms of corporate governance across the world.

Political Correctness as Anti-herding

Abstract: This is a political correctness model where a decision maker has to take decisions based on the advice of a possibly biased expert when states are unverifiable. I find that in equilibrium an expert motivated by career advancement reports not only against her possible bias but also against the public prior on the state of the world. This result is similar to the concept of anti-herding, which is developed under the assumption of asymmetric information on an expert's ability (rather than their preferences).

Work in Progress:

§ Reputational Distortions when Experts Have Similar Convictions

§ Matching Managerial Incentives for Risk Management to Shareholders’ Objectives

§ Promotion Policies in Firms with Diversity and Peer Connections