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Modern societies thrive on the advices of experts in a garden variety of areas. How do we identify these experts? In circumstances where an expert’s track record cannot be easily assessed by the general public, our society relies on peer reviews from “known” experts to identify new experts. This gives rise to an aristocratic expert class that is inevitably conservative. Young scholars, in order to earn the approval of old “known” experts, have incentives to study old subjects or follow old schools of thought at the expenses of new subjects and new schools of thought that would have better served a changing society. Our society tradeoffs conservatism against competence in its endeavor to identify experts, but the optimal tradeoff may not be achieved due to time-inconsistency. We formalize this problem with a model described in terms of legal experts such as lawyers and judges, and use it to shed light on noise voters and anti-intellectualism in the Trumpian era.​

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We introduce private information and divorce in a standard search and matching model of marriage without transfers. Forming a marriage allows agents to find out about each other's types, and then decide whether to incur the cost of divorce and re-enter the market or to save the divorce cost and remain in the marriage for the lifetime. We show that informative pre-marriage cheap talk communication (dating) can decrease marriage rate and at the same time increase the divorce rate. This is because the parties can partially reveal private information about each other through communication, which makes them more selective in their marriage decision. At the same time communication improves the future prospects after divorce, which makes the parties more willing to end less desirable marriages. In the main model with two types, when both a steady state equilibrium with dating and divorce and a babbling equilibrium with no divorce exist, the high type is better off with dating and divorce and the low type is worse off. Both the coexistence of the two steady states and the welfare comparison extend to a model with a continuum of types on both sides of the market.

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We study a dynamic model of price competition with differentiated products in which new generations of consumers acquire information about available products from their friends of previous generations. The social network, which links consumers across generations, affects the evolution of consumers' awareness of products and firms' long-term (steady-state) market shares. Focusing on steady-state equilibria, we examine how the structure of the social network - including connectivity and homophily - influences market shares, pricing, and welfare.

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When there is complementarity in production, will decentralized trading with incomplete information become efficient as search frictions vanish? We consider a dynamic market where heterogeneous buyers and sellers are randomly paired, with match values being supermodular in both types and production costs depending on seller's type. Within each match, the seller makes a take-it-or-leave-it offer without observing the buyer's type. We first highlight how different sellers trade off between price and selling probability differently under extremely large search frictions. Consequently, supermodularity is not necessary (not sufficient) for positive assortative matching (PAM) if the production cost increases fast (slowly) in sellers' type. When search frictions vanish, supermodularity reemerges as the condition for PAM, as sellers' incentive to secure trade in any given period grows inconsequential and the sorting becomes perfect as a result of private information. We demonstrate that the steady state equilibria exist and converge to Walrasian as search frictions vanish.

This paper studies a dynamic non-linear pricing problem, adding the possibility that the seller can costly renege on the initial contracts, which is common in reality in the forms of false advertising, add-on pricing and bait-and-switch. While reneging allows the seller to earn more surplus by offering a new extraction contract after learning the buyer’s preference, a forward looking buyer will hide information. We fully characterize the equilibrium selling mechanism with the presence of this strategic interaction and show that the quality distortion may be mitigated and participation can be higher when the market moves from full-commitment to one with modest reneging cost. In addition, we show that pooling mechanism can be also optimal since the seller can forgone learning opportunity in order to commit. We establish the precise condition under which the welfare improvement happens and further relate it to whether the market is niche or mass. By explicitly modeling seller’s information extraction problem without full commitment, our results have policy implications on protecting consumers from deceptive business tactics.