Research

Working in Progress


Abstract: A platform recommends products with heterogeneous profit margins to a continuum of buyers with various horizontal tastes and vertical intensities of preference. The recommendation accuracy is defined as the possibility that the recommended product matches the buyer's taste and comes at the cost of the buyer's privacy. The platform faces a trade-off between a higher likelyhood of trade from accurate recommendations and higher profit margins from biased recommendation favoring selected products. When the buyers' intensities of preferences is observable, the platform's first-best policy is to provide the highest level of recommendation accuracy only to sufficiently picky buyers who are highly sensitive to product matches, while always to recommend high-margin products to less picky buyers who are more tolerant of mismatches. This discriminatory approach, however, is extremely inefficient in terms of buyers' surplus. By contrast, when the platform has to screen buyers, the second-best policy incentivizes less picky buyers to select higher accuracy levels, effectively mimicking a system where buyers choose their preferred accuracy, which improves the efficiency of accuracy allocation significantly compared to the first-best scenario. The contrasting results highlight the welfare effects of the platform's incentive to discriminate the buyers with recommendation accuracy and the qualitive difference between price discrimination and accuracy discrimination.



Abstract: This paper considers a bargaining model with exogenous reputation effect at the beginning, which can be applied to a number of scenarios where the buyer cares about the quality of the good and receives some signals before the bargaining, leading the seller to signaling her types by offering a price with a uncertainty about the buyer’s belief. The result shows that the delay of trade is highly sensitive to the structure of extra information: when the the friction disappears, the inconclusive bad news leads to a ”weak delay” in the sense that the delay can be arbitrary short; while the conclusive bad news leads to a ”strong delay” in the sense that delay should be strictly bounded away from zero. This results sheds light on the relationship between information structure and inefficiency in bargaining and can be generalized in many settings.


Conference Presentation

Optimal Allocation of Accuracy in Personalized Product Recommendation, Econometric Society Australasian Meetings. Monash University, Caulfield Campus, Melbourne, Australia, December 2024.



Earlier Publications

Bayesian truncation errors in equations of state of nuclear matter with chiral nucleon-nucleon potentials, joint with Jinniu Hu and Ying Zhang, Physics Letters B 798 (2019): 134982.


How New Rural Cooperative Medical System Affect Labor Supply of Middle-Aged and Elderly Population in Rural Areas: Based on Analysis of Dynamic Stochastic Model, joint with Zhaona, Finance and Economics(in Chinese)