Working Papers

Optimal Stopping and Reputation

Abstract: An agent decides if and when to take an irreversible action while learning dynamically whether it will succeed. The agent is reputation-driven, seeking to signal his ability to learn. In equilibrium, the agent engages in contrarian behavior: he is more willing to act on limited information when the prior probability of success is lower. Reputation induces systematic distortions in decision timing: the agent acts prematurely when it is highly disadvantageous ex-ante, and with delay when it is advantageous. Distortions can also dynamically reverse, with premature action at the beginning  of the research process and excess caution at its end.

Competition and Herding in Breaking News [Online Appendix] Submitted

Abstract:  present a dynamic model of breaking news. Firms are rewarded for preempting their competitors and for making credible reports. Errors occur when firms fake, reporting without evidence. In equilibrium, competition and observational learning exacerbate errors and give rise to rich dynamics in reporting. Errors propagate through the market via a copycat effect, where a new report triggers a surge in faking. The copycat effect is driven by observational learning but depends on the nature of competition, as it is more prevalent in settings where there are smaller benefits to being a first reporter. This behavior implies not only the propagation of errors but also herding on the timing of news.

Homophily in Social Media and News Polarization (with Luis Abreu and Doh-Shin Jeon)

Abstract: We consider an ad-financed media firm that chooses the ideological location of its news when consumers who directly receive the news can share it with their followers on social media. When the firm maximizes the breadth of news sharing, it tends to produce polarized news if the mean (the variance) of ideological locations of the followers of a direct consumer is a convex (concave) function of the latter’s location. This implies that it is the curvature, rather than the slope, of homophily that determines news polarization so that surprisingly, larger homophily at the center (extremes) can lead to (no) polarization.

Reputation in News Media: Speed vs. Accuracy

Abstract: We study news firms’ reporting behavior, including their propensity to misreport, when they are reputation driven. A news firm (sender) dynamically learns about a state and reports to a consumer (receiver). Senders are concerned with their reputation, and must choose when to make a report. In equilibrium, the sender fakes, i.e., reports despite being ignorant of the state, with positive probability in every period. This faking in turn leads to a higher level of misreporting than if the sender were instead truthful. We further find the sender’s reputation is endogenously rewarded for both speed and accuracy, and thus we provide a microfoundation for the speed-accuracy tradeoff. Finally, we consider the dynamics in the sender’s strategy, finding that the sender becomes more truthful, and thus less prone to misreporting, as time passes.