Luke Zhao

This paper studies dynamic competition in quality and price when consumers are heterogeneous. Firms face exogenous horizontal differentiation from consumer preferences and endogenous vertical differentiation from evolving product quality. The firms investment decisions are non-monotonic in the investment cost, and the two dimensions of differentiations exhibit dynamic substitution / complementary relations depending on the investment cost.

This paper considers optimal information structures in restricting the information of the Sender in a cheap talk game. Monotone partitional information structures might not obtain optimality, and some signals that the Sender receives are required to be partially garbled together in order to relax the Sender's incentive constraints. We provide a partial characterization of the optimal structure and show that it is from a class of structures that are more general than monotone partitional, but only exhibit certain local nonmonotonicities of the information structure. Our analysis builds on the graphical characterization of feasible information structures in Gentzkow and Kamenica (2016) and shows that this methodology can be used in complex information design problems with large state and action spaces. In an extension we use the same approach to solve problems with capacity constraints on communication.

It is really easy to cheap talk with social media, and extreme events happen more often. In this paper, we consider how much information can be transmitted by cheap talk when truth is no longer constrained to a finite scope. More technically, we study the classic Crawford and Sobel (1982) with an unbounded state space. We found that the information transmission is still effective if the prior is a thin-tail distribution, but information transmission is limited if the prior has a heavy tail. This suggests cheap talk can be less useful in a world with more extreme events.

In judicial practice, blockchain evidence is frequently regarded as self-authenticating by virtue of its decentralized storage architecture and cryptographic safeguards. Nevertheless, these very characteristics may also lead judges to adopt a superficial standard of review, thereby both relaxing the admissibility threshold for blockchain evidence and attenuating its probative assessment within the broader fact-finding process. Based on empirical analysis of 2,741 judgments, we find that there are two distinct paths behind the seemingly high admissibility rate of blockchain evidence: a logic-driven path of substantive scrutiny and a cue-driven path of superficial scrutiny. Deeper analysis reveals that “notarization or forensic examination” and “explicit objections” both significantly increase the likelihood of substantive scrutiny, indicating that judges tend to construct chains of fact through multiple, interrelated pieces of information. While such external verification can indeed promote substantive scrutiny, the primary responsibility must rest with judges rather than litigants. Accordingly, future reforms should aim to reduce over-reliance on peripheral cues and, by strengthening courtroom communication, enhancing the effectiveness of cross-examination, and refining evidentiary rules, foster a shift toward substantive scrutiny of blockchain evidence.

While the truth is always complicated, people may not always be able to paint the full picture. We consider a sender-receiver game in which the truth state is high-dimensional, while Sender can only communicate low-dimensional information.

Online shopping often offer full-refund-guarantee policy, which is necessary for risk-averse consumers. There are also frictions, such as mailing cost or time cost, that are not included in the refund. Refunding insurance is then invented to mitigate such frictions, but then consumers are strictly encouraged to over-purchase and refund instead of carefully evaluating whether a purchase is necessary, which in turn breaks the refunding insurance. In this project, we design a proper mechanism to allow a more effective refunding insurance implementation.