arXiv subjects

Mira Frick

Publications and source records attributed to Mira Frick.

3 recordsLinked to original sources

arXiv2026

Contagious Ambiguity

We study the strategic impact of ambiguity through the channel of higher-order beliefs. We show that even small amounts of prior ambiguity about game payoffs can generate arbitrarily large amounts of higher-order ambiguity. This gives rise to a novel form of contagion: vanishingly small payoff ambiguity can select ``secure'' actions (e.g., non-participation) as the unique equilibrium outcome even when those actions are almost dominated. We highlight two main implications. First, classical robustness results under probabilistic uncertainty break down under ambiguity when players can deviate to secure actions. Second, if a designer can introduce small amounts of payoff ambiguity into a game, this can serve as a powerful tool for unique implementation.

econ.TH↗

arXiv2024

Multidimensional Screening with Precise Seller Information

A multi-product monopolist faces a buyer who is privately informed about his valuations for the goods. As is well-known, optimal mechanisms are in general complicated, while simple mechanisms -- such as pure bundling or separate sales -- can be far from optimal and do not admit clear-cut comparisons. We show that this changes if the monopolist has sufficiently precise information about the buyer's valuations: Now, pure bundling always outperforms separate sales; moreover, there is a sense in which pure bundling performs essentially as well as the optimal mechanism. To formalize this, we characterize how fast the corresponding revenues converge to the first-best revenue as the monopolist's information grows precise: Pure bundling achieves the same convergence rate to the first-best as optimal mechanisms; in contrast, the convergence rate under separate sales is suboptimal.

econ.TH↗

arXiv2023

Monitoring with Rich Data

We consider moral hazard problems where a principal has access to rich monitoring data about an agent's action. Rather than focusing on optimal contracts (which are known to in general be complicated), we characterize the optimal rate at which the principal's payoffs can converge to the first-best payoff as the amount of data grows large. Our main result suggests a novel rationale for the widely observed binary wage schemes, by showing that such simple contracts achieve the optimal convergence rate. Notably, in order to attain the optimal convergence rate, the principal must set a lenient cutoff for when the agent receives a high vs. low wage. In contrast, we find that other common contracts where wages vary more finely with observed data (e.g., linear contracts) approximate the first-best at a highly suboptimal rate. Finally, we show that the optimal convergence rate depends only on a simple summary statistic of the monitoring technology. This yields a detail-free ranking over monitoring technologies that quantifies their value for incentive provision in data-rich settings and applies regardless of the agent's specific utility or cost functions.

econ.TH↗