Berlin IO Day

Program

The workshop is fully booked and the registration is closed!

Program (PDF, 97.98 KB)

Abstract & Paper download

Robust Identification in Repeated Games: An Empirical Approach to Algorithmic Competition
Cristina Gualdani
Abstract: We study the identification of economic primitives when algorithms make repeated strategic choices. While theory and simulations suggest that repeated-game equilibrium-like behavior often emerges in these settings (e.g., Calvano et al., 2020), a wide range of outcomes can emerge, depending on typically unobserved features of algorithms and the environment. We develop an incomplete model to characterize bounds on cost parameters without assumptions on equilibrium selection or algorithmic design. Through simulations of algorithmic play, we show our bounds are valid across different algorithm specifications. Moreover, bounds can be informative, especially when leveraging demand variation across markets.

Steering Demand Effectively: The Benefits of Promoting Popular Products
Cole Williams (with Anastasiia Parakhoniak)
Abstract: We investigate demand-steering rules used by an online platform to connect buyers and sellers when sellers employ pricing algorithms. We introduce the popularity-based prominence (PBP) display rule, whereby the platform allocates prominent positions to sellers who have demonstrated greater popularity in terms of sales compared to their competitors. We show that PBP performs effectively in low-information environments, encouraging competitive pricing and guiding consumers to high-quality products, thereby increasing consumer surplus. Furthermore, PBP proves robust to being outperformed by other steering rules. We assess the practical implementation and effectiveness of PBP through Q-learning experiments, demonstrating its potential to improve marketplace outcomes.

Dynamic Evidence Disclosure: Delay the Good to Accelerate the Bad
PDF
Julia Salmi (with Jan Knoepfle)
Abstract: We analyze the dynamic tradeoff between generating and disclosing evidence. Agents are tempted to delay investing in a new technology in order to learn from information generated by the experiences of others. This informational free-riding is collectively harmful as it slows down learning and innovation adoption. A welfare-maximizing designer can delay the disclosure of previously generated information in order to speed up adoption. The optimal policy transparently discloses bad news and delays good news. This finding resonates with regulation demanding that fatal breakdowns be reported promptly. The designer’s intervention makes all agents better off.

Prices and Concentration: A U-shape? Theory and Evidence from Renewables
Michele Fioretti
Abstract: We study competition and concentration with technology-diversified firms. Theoretically, when the largest, most efficient firm receives some high-cost capacity from rivals, it expands low-cost supply to undercut them, prompting aggressive responses to defend market shares. Diversification offsets concentration, decreasing prices. However, large transfers are anticompetitive, as substantial capacity differences make undercutting unprofitable. Exploiting renewable intermittencies in the Colombian electricity market, where firms own hydropower and fossil-fuel technologies, we find a U-shape between prices and concentration. Counterfactuals doubling the leader’s high-cost capacity lowers prices by 10\%, while larger transfers raise them, revealing how firms’ capacity and technologies’ efficiency shape market power.

Sequencing Bilateral Negotiations with Externalities
Markus Reisinger (with Johannes Muenster)
Abstract: In most bargaining situations with multiple parties, the negotiation sequence is crucial for the efficiency of outcomes and the parties’ success. However, the driving forces behind the socially and privately optimal sequences are poorly understood. To study these issues, we consider a general framework of bilateral negotiations between a principal and two agents with bargaining externalities. We show that the agents’ bargaining strengths are essential for the determination of the sequence. The surplus is highest if the principal negotiates with the stronger agent first, regardless of externalities being positive or negative. The principal always chooses the efficient sequence if externalities are negative. Instead, if externalities are positive, the principal often prefers to negotiate with the weaker agent first. We show that our results extend to a general number of agents, demonstrate that the sequence can be non-monotonic in the externalities, and provide conditions for simultaneous negotiations to be optimal.

Host of the 18th Berlin IO Day

Many thanks to Radosveta Ivanova-Stenzel (Technische Universität Berlin), who is the local organizer this time.

About Berlin IO Day

The Berlin IO Day is a one-day workshop sponsored by the Berlin Centre for Consumer Policies (BCCP) and the Vereinigung der Freunde e.V. (VdF) des DIW Berlin and supported by the Berlin's leading academic institutions, including DIW Berlin, ESMT Berlin, Freie Universität Berlin, Humboldt-Universität zu Berlin, and Technische Universität Berlin which takes place twice a year, in the Spring and in the Fall.

For each Berlin IO Day, we will invite four or five speakers to present their recent work on a variety of IO topics, followed by a general discussion. The aim is to create an international forum for high quality research in Industrial Organization in the heart of Berlin, one of Europe's most vibrant and intellectually lively cities.

Organizers:

• Tomaso Duso, Jo Seldeslachts, Hannes Ullrich (DIW Berlin)
• Michał Grajek, David Ronayne (ESMT Berlin)
• Andreas Asseyer (Freie Universität Berlin)
• Daniel Guhl, Daniel Klapper, Sebastian Schweighofer-Kodritsch, Roland Strausz (Humboldt-Universität zu Berlin)
• Radosveta Ivanova-Stenzel (Technische Universität Berlin)