Nick Janetos
Interests: Applied Microeconomic Theory, Social Norms, Political Economy

Job Market Paper

Fads and Imperfect Information

A fad is something that is popular for a time, then unpopular. For example, in the 1960s tailfins on cars were popular, in the 1970s they were not. I study a model in which fads are driven through the channel of imperfect information. Some players have better information about past actions of other players, and all players have preferences for choosing the same actions as well-informed players. In equilibrium, better informed (high-type) players initially pool on a single action choice. Over time, the low-type players learn which action the high-type players are pooling on, and start to mimic them. Once a tipping point is reached, the high-type players switch to a different action, and the process repeats. I explicitly compute equilibria for a specific parameterization of the model. Low-type players display instrumental preferences for conformity, choosing actions which appear more popular, while high-type players sometimes coordinate on actions which appear unpopular. Improving the quality of information to low-type players does not improve their payoffs, but increases the rate at which high-type players switch between actions.

Research

Reputation Dynamics in a Market for Illicit Drugs (joint with Jan Tilly)

We analyze reputation dynamics in an online market for illicit drugs using a novel dataset of prices and ratings. The market is a black market, and so contracts cannot be enforced. We study the role that reputation plays in alleviating adverse selection in this market. We document the following stylized facts: (i) There is a positive relationship between the price and the rating of a seller. This effect is increasing in the number of reviews left for a seller. A mature highly-rated seller charges a 20\% higher price than a mature low-rated seller. (ii) Sellers with more reviews charge higher prices regardless of rating. (iii) Low-rated sellers are more likely to exit the market and make fewer sales. We show that these stylized facts are explained by a dynamic model of adverse selection, ratings, and exit, in which buyers form rational inferences about the quality of a seller jointly from his rating and number of sales. Sellers who receive low ratings initially charge the same price as highly-rated sellers since early reviews are less informative about quality. Bad sellers exit rather than face lower prices in the future. Under some parameter restrictions, our model admits a unique equilibrium.

Voting as a Signal of Education

Since the chance of swaying the outcome of an election by voting is usually very small, it cannot be that voters vote solely for that purpose. So why do we vote? One explanation is that smarter or more educated voters have access to better information about the candidates and that people have a concern for appearing to be well-informed through their choice of whether to vote. If voting behavior is publicly observed, then more educated voters may vote to signal their education, even if the election itself is inconsequential and the cost of voting is the same across voters. I explore this explanation with a voting game in which players are unsure about the importance of swaying the election, high type players receive more precise signals, and all players have reputational concerns. I find that in very large games, voter turnout and the signaling return to voting remains high even though the chance of swaying the election disappears and the cost of voting is the same for all types. I explore generalizations of this model, and close by comparing the stylized features of voter turnout to the features of the model.

Teaching Experience

Teaching Assistant: 
Introductory microeconomics
Game theory
Social choice theory
 
Instructor:
Introductory microeconomics
Game theory

Other

Selected Presentations: 
Pennsylvania Theory Conference (2015)
North American Summer Meetings of the Econometric Society (2016)
Stony Brook Game Theory Festival (2016)
Game Theory World Congress (2016)

References

Steven Matthews
stevenma@econ.upenn.edu
215-898-7749

Aislinn Bohren
abohren@econ.upenn.edu
908-432-7889

Andrew Postlewaite
apostlew@econ.upenn.edu
(215)-898-7350

Rebecca Stein (Teaching reference)
rstein2@ssc.upenn.edu
(215)-898-7733

Status

I am on the job market and will be available for interviews during the AEA meetings in Chicago from 1/6 to 1/8.