Northwestern University 
BRUNO STRULOVICI

DEPARTMENT OF ECONOMICS

 


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HOW TO CONTACT ME

Department of Economics
Northwestern University
2211 Campus Drive
Evanston, Illinois 60208, USA

Office number: 3225

Telephone: 847-491-8233
Facsimile: 847-491-7001
e-mail: b-strulovici@northwestern.edu

 



CURRICULUM VITAE


 

TEACHING

Economics 335 (Political Economics) Syllabus

Economics 415 (Dynamic Methods for Economics) Syllabus

Economics 414 (Frontiers of Applied Theory) Syllabus upon request.


 

RECENT PAPERS

 

Can Society Function Without Ethical Agents? An Informational Perspective (new)

·       This paper proposes a model of societal learning, in which information may be scarce and discoverable by individuals with a special expertise or access to the fact to be learned.

·       When these individuals are devoid of intrinsic motive to learn about the truth, the feasibility of societal learning depends on statistical conditions pertaining to the supply of evidence about the fact.

·       Applications to institution enforcement, social cohesion, scientific progress, and historical revisionism are discussed.

 

Persistent Private Information Revisited with Alex Bloedel and Vijay Krishna (new)

·       We revisit Williams’ (Econometrica, 2011) principal-agent model of insurance with persistent private information and continuous time.

·       The contract characterized as optimal in that paper belongs to a class of contracts that can be implemented by self-insurance and is generically suboptimal within this class.

·       The claim that immiserisation disappears with persistent private information and the effects attributed to persistent private information and to continuous time by that paper are not supported by our analysis. We elucidate the sources of these discrepancies.

 

Supplement

 

Renegotiation-Proof Contracts with Persistent Private Information (new)

·       This paper defines a concept of renegotiation-proof contracts for dynamic games in which the state is either (i) publicly observed or (ii) driven by a diffusion process.

·       The concept uses the algebraic notion of left-action group to compare contracts across distinct states. It subsumes the notion of internal consistency used in repeated games.

·       The concept is applied to a principal-agent insurance model in which the agent has persistent private endowment shocks. Renegotiation-proof contracts have a closed-form and are characterized by a single number, the contract sensitivity to the agent’s reports.

 

Early-Career Discrimination: Spiraling or Self-Correcting? with Arjada Bardhi and Yingni Guo (new)

·       How does early-career discrimination affect workers’ long term prospects? Does discrimination get amplified or does it subside over time?

·       We show that the answer critically depends on how workers’ ability is revealed over time: when failures are more revealing of workers’ ability, even a small amount of early discrimination can have a large impact on long-term prospects, while the opposite is true for jobs in which skills are revealed through breakthroughs

·       We stablish this result in a toy model as well as in large labor market model with flexible wages, the modeling of which is another contribution of the paper.

 

Judicial Mechanism Design with Ron Siegel (new version)

·       When the suspect of a crime is arrested, he enters a judicial process, or “mechanism,” whose outcomes include evidence against him and a sentence

·       We study the optimal design of judicial mechanisms for several notions of welfare distinguished by their treatment of deterrence

·       The optimal mechanism presents several features reminiscent of the US criminal justice system, such as plea bargaining, a trial with a binary verdict corresponding to acquittal and conviction, and a conviction threshold based on the likelihood of guilt of the defendant

·       The commitment assumption needed to perform mechanism design analysis finds an incarnation in several features of the U.S. criminal justice system.

 

Crime Entanglement, Deterrence, and Witness Credibility with Harry Pei (new)

·       When a defendant is accused of multiple crimes, one may consider punishing him if the overall probability that he has committed crime is high.

·       We show that entangling criminal accusations in this way can severely harm deterrence and reduce witness credibility.

·       When conviction entails a large punishment, an individual’s decisions to commit distinct crimes are strategic substitutes and potential victims’ accusations are strategic complements.

·       This induces negatively correlated information and a coordination motive among potential victims, and leads to uninformative accusations, ineffective deterrence, and frequent crime in equilibrium.

 

The Economic Case for Probability-Based Sentencing with Ron Siegel (new)

·       Criminal trials do not formally allow sentences to reflect the strength of evidence.

·       A growing number of legal scholars have criticized this restriction.

·       This paper proposes an economic model that formalizes and unifies the arguments put forward in the law literature and addresses three of the remaining objections to the use of evidence-based sentencing: i) political legitimacy (the impact on the coercive power of the state), ii) robustness to details of the environment, and iii) incentives to acquire evidence.

 

Contestable Norms with Mikhail Safronov

·       To be sustainable without external enforcement, social norms, contracts, and other agreements must include provisions not only to deter violations but also to address challenges to move to other norms, contracts, or agreements.

·       We introduce contestable norms, which achieve both objectives, analyze their conceptual foundation, efficiency, stability, design, and evolution, and characterize their payoffs.

·       Contestable norms may be inefficient, no matter how frequent agents’ interactions and proposals, to an extent determined by the amount of conflict inherent in agents’ strategic environment.

·       The analysis sheds new light on the efficient institution hypothesis and the renegotiation paradox.

 

Collective Commitment with Christian Roessler and Sandro Shelegia, Journal of Political Economy, February 2018

·       Dynamic political equilibria are often inefficient. Can agents collectively commit at the outset to a better policy?

·       Under a power consistency condition, we find that a dynamic equilibrium is dominated by commitment to another long-term policy if and only if the agents exhibit a preference cycle among all long-term policies

·       Power consistency relates the power structure in the dynamic game to the one used to compare long-term policies. It holds if the majority rule is used for all comparisons, but is violated when agents are time inconsistent

·       Imposing restrictions on the policies considered, such as anonymity, may address the indeterminacy predicted by our result

 

Contract Negotiation and the Coase Conjecture, Econometrica, March 2017

·       Actual negotiations contain a puzzle: parties try to withhold private information until striking a deal, but the timing and nature of the agreement can reveal some of this private information and, hence, reveal further gains from negotiations

·       This paper provides a dynamic resolution of the puzzle, which delivers a strategic foundation for renegotiation-proof contracts and extends the analysis of the Coase conjecture (but not the conjecture itself) to richer contractual environments

·       All equilibria converge to the same efficient contracts as negotiation frictions vanish, which only depend on the initial relationship between parties and are straightforward to characterize graphically

 

Supplement

 

A Theory of Intergenerational Altruism with Simone Galperti, Econometrica, July 2017

·       Intergenerational altruism drives any assessment for the long-term consequences of our actions, but what principles underlie such altruism?

·       We axiomatize altruistic preferences such that a generation directly cares about all future generations, and cares about their whole well-being rather than how much they consume

·       This yields a tractable class of altruistic preferences which includes the beta-delta discounting model as particular case, but also models in which the discount factor between two periods depends on consumption at other periods

·       Although these preferences always exhibit present bias, we find that a social planner aggregating the altruistic preferences of all generations may be time consistent

 

     Supplement

 

The Hidden Cost of Direct Democracy: How Ballot Initiatives Affect Politicians’ Selection and Incentives with Carlo Prato, Journal of Theoretical Politics, July 2017

·       Direct democracy is often compared to representative democracy. But in modern regimes, these two types of democracies coexist. How do citizen initiatives and referendums affect regimes which are otherwise governed by elected representatives?

·       We identify several equilibrium effects, showing that direct democracy institutions can reduce the quality of selection and incentives of elected officials, sometimes reducing welfare even when these institutions do not entail any administrative or other exogenous cost

 

Social Experimentation with Interdependent and Expanding Technologies with Umberto Garfagnini, Review of Economic Studies, October 2016

·       Experimentation with correlated bandits is well-known to be intractable, and yet it captures many real-life technological environments

·       We analyze experimentation by overlapping generations. Payoffs are determined by the path of a Brownian motion and, hence, correlated

·       “Radical” experimentation means going beyond the farthest known technology and incurs a specific “expansion” cost. It is eventually abandoned with probability 1 for all parameters of our model, leading to stagnation and convergence to a single technological standard

 

Beyond Correlation: Measuring Interdependence through Complementarities with Margaret Meyer

·       Correlation is not an economically-grounded measure of interdependence of random variables, just as variance fails to capture risk except in quadratic or Gaussian cases

·       Interdependence often matters to economists because of complementarities (i.e., supermodularity) in the objective functions they analyze

·       We study this supermodular ordering of interdependence, providing characterizations and concrete methods for comparing distributions, including those distributions generated by common and idiosyncratic shocks

 

 

RESEARCH (BY TOPIC)

 

COMPARATIVE STATICS

 

Beyond Correlation: Measuring Interdependence through Complementarities with Margaret Meyer

 

Discounting, Values, and Decisions  with John Quah, Journal of Political Economy, October 2013

 

Aggregating the Single Crossing Property with John Quah, Econometrica, September 2012.

Increasing Interdependence of Multivariate Distributions with Meg Meyer, Journal of Economic Theory, Symposium on Inequality and Risk, July 2012.

Generalized Monotonicity Analysis with Thomas Weber, Economic Theory, June 2010

Comparative Statics, Informativeness, and the Interval Dominance Order with John Quah, Econometrica, November 2009.

 

       Multidimensional extension

 

DECISION THEORY

 

A Theory of Intergenerational Altruism with Simone Galperti, Econometrica, July 2017

 

        Supplement

DYNAMIC METHODS

 

On the Smoothness of Value Functions and the Existence of Optimal Strategies in Diffusion Models with Martin Szydlowski, Journal of Economic Theory, Symposium on Dynamic Contracts and Mechanism Design, September 2015

 

FINANCE

 

Capital Mobility and Asset Pricing with Darrell Duffie, Econometrica, November 2012.

             

      Supplement to "Capital Mobility and Asset Pricing"

 

Performance Sensitive Debt with Gustavo Manso and Alexei Tchistyi, Review of Financial Studies (winner of the Society for Financial Studies’ Young Researcher Award, 2009), May 2010.

LAW AND ECONOMICS

 

Judicial Mechanism Design with Ron Siegel (new version)

 

Crime Entanglement, Deterrence, and Witness Credibility with Harry Pei (new)

 

The Economic Case for Probability-Based Sentencing with Ron Siegel (new)

 

 

POLITICAL ECONOMY

 

Can Society Function Without Ethical Agents? An Informational Perspective (new)

 

Collective Commitment with Christian Roessler and Sandro Shelegia, Journal of Political Economy, February 2018

 

The Hidden Cost of Direct Democracy: How Ballot Initiatives Affect Politicians’ Selection and Incentives with Carlo Prato, Journal of Theoretical Politics, July 2017 

 

Learning While Voting: Determinants of Collective Experimentation Econometrica, May 2010.

     Extension: Voting and Experimentation with Correlated Types

     Working paper version (Oxford, 2007): Voting and Experimentation

     This version includes the “Singaporean Restaurant” example

 

RENEGOTIATION AND BARGAINING

 

Contestable Norms with Mikhail Safronov (new version)

 

Contract Negotiation and the Coase Conjecture, Econometrica, March 2017

Supplement

 

Contract Negotiation and Screening with Persistent Information, January 2017 (Updated)

 

Renegotiation-Proof Contracts with Persistent Private Information (new version)

For the 2011 version with moral hazard, click here.

 

SOCIAL LEARNING AND EXPERIMENTATION

 

Can Society Function Without Ethical Agents? An Informational Perspective (new)

(cross-listed with Political Economy)

 

Social Experimentation with Interdependent and Expanding Technologies with Umberto Garfagnini, Review of Economic Studies, October 2016

 

Learning While Voting: Determinants of Collective Experimentation Econometrica, May 2010.
(cross-listed with Political Economy)

 

 

AUCTIONS AND CONSUMER THEORY

Substitute Goods, Auctions, and Equilibrium with Paul Milgrom, Journal of Economic Theory, January 2009.

PUBLICATIONS IN OPERATIONS RESEARCH

 

Additive Envelopes of Continuous Functions with Thomas Weber, Operations Research Letters, May 2010.

Monotone Comparative Statics: A Geometric Approach with Thomas Weber, Journal of Optimization Theory and Applications, June 2008.

 


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