When meeting a random stranger, it can be difficult to recognize who is like you (ingroup) and who is not (outgroup). I construct a model to explore how noise in detecting whether the other player is an ingroup or an outgroup impacts overall cooperation in strategic interactions. When the game is repeated, noisy identity can generate welfare gains that are not possible with perfect recognition by encouraging players to cooperate in all periods except the last one, regardless of how they identified the opponent. Importantly, noisy identity can sustain additional cooperation even when the potential cost of doing so is high. This result is largely driven by the level of noise in detecting who is an outgroup, whereas the role in recognizing an ingroup is less prominent.
Are Changes of Major Major Changes? The Roles of Grades, Gender, and Preferences in College Major Switching (with Jamin D. Speer), Economics of Education Review, 2019.
The choice of college major is a key stage in the career search, and over a third of college students switch majors at least once. We provide the first comprehensive analysis of major switching, looking at the patterns of switching in both academic and non-academic dimensions. Low grades signal academic mismatch and predict switching majors - and the lower the grades, the larger the switch in terms of course content. Surprisingly, these switches do not improve students' grades. When students switch majors, they switch to majors that "look like them": females to female-heavy majors, and so on. Lower-ability women flee competitive majors at high rates, while men and higher-ability women are undeterred. Women are far more likely to leave STEM fields for majors that are less competitive - but still somewhat science-intensive - suggesting that leaving STEM may be more about fleeing the "culture" of STEM majors than fleeing science and math.
Advertising for Consideration (with Joaquin Lopez and Aleksandr Yankelevich), Journal of Economic Behavior and Organization, 2019.
We analyze markets where firms competing on price advertise to increase the probability of entering consumers' consideration sets. We find that moderately costly advertising allows firms to raise prices and possibly profits by reducing the fraction of price-conscious consumers, and by segmenting the market according to whether or not consumers consider the lower priced firm. However, when the cost of advertising is sufficiently low, advertising leads to a prisoners' dilemma that adversely impacts profits without affecting expected prices.
An empirical investigation on the transfer of expatriates within MNCs from a knowledge perspective (with Joonhyung Lee), Oxford Bulletin of Economics and Statistics, 2019.
We study the use of expatriates in transferring knowledge within a multinational corporation (MNC). We argue that MNCs use expatriates to allocate knowledge between headquarters and its foreign affiliates. With data from MNCs headquartered in South Korea, we trace unobservable knowledge using observable labour mobility. Our empirical analysis shows that the use of expatriates increases as communication between South Korea and the host country becomes more costly. However, the extent to which the use of expatriates relates with communication costs decreases in the sectoral complexity.
Drop out, switch majors, or persist? The contrasting gender gaps (with Jamin D. Speer) Economics Letters, 2018.
Men and women respond differently to early-college struggles. Men are more likely than women to drop out of college, while women are more likely to switch majors. These effects offset so that there is no gender gap in the probability of graduating in one's initial major choice. For students who begin in STEM majors, however, women are far less likely to graduate in the field, driven by the fact that they are twice as likely to switch majors. We find no evidence that women are more sensitive to poor academic performance in the switching or dropout decisions.
Press: Washington Post
Consumer Search with Asymmetric Price Sampling (with Aleksandr Yankelevich), Economics Letters, 2014.
We explore asymmetries in the way consumers sample prices in a simple sequential search framework. In equilibrium, the price distribution of a firm catering to more local consumers first-order stochastically dominates that of its rival. Prices rise in the degree of asymmetry. (Extended version here)
We study the adjustment of knowledge for an expanding MNC through the lens of a knowledge hierarchy model. In particular, based on the recent evidence that expatriates serve as a means for knowledge transmission from MNCs to their foreign affiliates, we investigate how the use of expatriates changes when foreign affiliates expand or contract. Using data on labor mobility for MNCs headquartered in South Korea, we analyze foreign affiliates that expand with and without changing their organization of hierarchical layers. We find that foreign affiliates who expand by changing their number of organizational layers require more expatriates, especially at the higher layers. When affiliates expand by adding an organizational layer, the new layer mostly comprises expatriates, while the need for expatriates in the layer immediately below declines. Similarly, when affiliates contract by dropping a layer, the need for expatriates in the layer immediately below increases. Additionally, when affiliates grow without adding a layer, the span of control at the upper layer(s) increases. These results are consistent with the predictions of the knowledge hierarchy model.
Expectations and Follow-Through: The Roles of Confidence and Non-Cognitive Skills for Self-Employment (with Andrew Hussey and Daniel Mangrum)
We examine the predictors of both long-term expectations of self-employment and future self-employment activities and earnings among the same individuals, with a particular focus on gender differences and the roles of non-cognitive skills. Using longitudinal data from the GMAT Registrant Survey, which includes prospective graduate management students, our analysis involves wide-ranging and novel sets of variables, including work-life balance and job preferences, self-efficacy, confidence, and other non-cognitive skills or characteristics. We find notable differences in the drivers of self-employment and self-employment expectations between men and women, and also large differences in the set of variables that relate to self-employment intentions versus future self-employment outcomes. While preferences for work-life balance matter more for men's expectations, preferences about non-monetary characteristics of the job, such as job security and interesting work, matter more for women. In contrast, regarding actual self-employment, only non-cognitive skills play a substantial role for women, while men are driven mostly by preferences over work-life balance. Confidence in one's quantitative skills influences self- employment decisions, especially for women, and it also affects success in both the self-employed and the traditionally employed sectors, as reflected in earnings.