Isaias (Isa) Chaves Villamizar
Job Market Candidate
Department of Economics
579 Serra Mall
Stanford, CA 94305
Primary: Market Design and Microeconomic Theory
Secondary: Political Economy, Information Economics
Expected Graduation Date:
Andrzej Skrzypacz (Co-Primary):
Matthew Jackson (Co-Primary):
Privacy in Bargaining: The Case of Endogenous Entry (Job Market Paper)
I study the role of privacy in bargaining. A seller makes offers every instant, without
commitment, to a privately informed buyer. There are potential competing buyers (entrants) who
observe something about the negotiation and can choose to interrupt it by triggering a bidding
war. As entrants learn about ongoing disagreement, they update their beliefs about the type of
the buyer. The seller's lack of commitment reverses the seemingly intuitive effects of publicity. If
learning that the buyer's type is lower encourages entrants, so that the seller ''should'' want to
make publicly observable offers that lure in entrants against the incumbent buyer, then in
equilibrium the seller typically prefers private bargaining. If learning that the buyer's type is lower
discourages entrants, so that the seller ''should'' want to hide her offers to avoid frightening away
entrants, then in equilibrium the seller prefers public bargaining.
When to Hold an Auction? (with Shota Ichihashi)
We study the optimal timing of an auction in a setting where bidders arrive and depart stochastically over time.
First, we compare the revenue-maximizing timing and welfare-maximizing timing.
We show that sellers hold auctions too late or too early whenever (censored at 0) virtual values are more or less right-skewed than values.
We connect the relative right-skewness of virtual values to the ''price elasticity of demand'' of the bidder's valuation distribution.
In particular, we show that sellers typically hold auctions inefficiently late.
Second, we prove that the use of simple timing rules (i.e., a fixed deadline chosen in advance) can lose an arbitrarily large fraction of the revenue from the optimal stopping rule.
This underscores the importance of taking timing seriously for good auction market design.
Pricing Responses to Platform Leakage: Optimal Design When Matches Are Irrevocable
I analyze a two-period model of a monopolist platform running a two-sided one-to-one matching market between workers and firms, where (i) agents can contract privately off the platform once they are matched (matches are irrevocable); (ii) they differ in how likely they are to want further business with a match (their durability);
and (iii) firms have private information about their durability. I characterize the profit-maximizing matching and pricing policies. I show that the platform typically wants to impose a novel kind of distortion. In the first period, the platform wants to give firms either extremely high durability matches, or extremely low durability ones, but it would rather leave more firms unmatched than give any of them ''medium'' durability matches. This is in contrast to a seemingly related static model where a platform matches agents with privately known taste for quality to
goods of different quality: in that case, the platform might price the bottom tier
of agents out of the market, but it would never sell a low quality good before a
medium quality one.
He Who Counts Elects: Economic Elites, Political Elites, and Electoral Fraud (with Leopoldo Fergusson and James A. Robinson)
Economics and Politics (2015).
What determines the extent of electoral fraud? This paper constructs a model of the trade-off between fraud and policy concessions (public good provision) which also incorporates the strength of the state. In addition, we parameterize the extent to which economic elites (to whom fraud is costly) and political elites (to whom fraud is advantageous) ''overlap.'' The model predicts that fraud will be lower and public good provision higher when land inequality is higher, the overlap between elites lower, and the strength of the state higher. We test these predictions using a unique, municipal-level dataset from Colombia's 1922 Presidential elections. We find empirical support for all the predictions of the model.
Indirect Rule and State Weakness in Africa: Sierra Leone in Comparative Perspective (with Daron Acemoglu, Philip Osafo-Kwaako, and James A. Robinson)
In Sebastian Edwards, Simon Johnson, and David Weil (eds.), African Successes: Sustainable Growth, University of Chicago Press, 2016.
A fundamental problem for economic development is that most poor countries have 'weak states' which are incapable or unwilling to provide basic public goods such as law enforcement, order, education and infrastructure. In Africa this is often attributed to the persistence of 'indirect rule' from the colonial period. In this paper we discuss the ways in which a state constructed on the basis of indirect rule is weak and the mechanisms via which this has persisted since independence in Sierra Leone. We also present a hypothesis as to why the extent to which indirect rule has persisted varies greatly within Africa, linking it to the presence or the absence of large centralized pre-colonial polities within modern countries. Countries which had such a polity, such as Ghana and Uganda, tended to abolish indirect rule since it excessively empowered traditional rulers at the expense of post-colonial elites. Our argument provides a new mechanism which can explain the positive correlation between pre-colonial political centralization and modern public goods and development outcomes.
Reinventing the Wheel: The Economic Benefits of
Wheeled Transportation in Early Colonial British
West Africa (with James A. Robinson and Stanley L. Engerman)
In Emmanuel Akyeampong, Robert Bates,
Nathan Nunn and James A. Robinson (eds.), Africa's Development in Historical Perspective,
Cambridge University Press, 2014.
One of the great puzzles of Sub-Saharan African economic history is that wheeled transportation was barely used prior to the colonial period. Instead, head porterage was the main method of transportation. The consensus among historians is that this was a rational adaption to the underlying conditions and factor endowments. In this paper we undertake the first systematic investigation of the relative costs of the different forms of wheeled transportation in Africa. We focus on calculating the social savings and social rate of return associated with the introduction of the railway into colonial British West Africa. We provide more speculative estimates of the social savings of other forms of wheeled transportation. We find that all forms of wheeled transportation were economically efficient in the sense that they increased national income, though the estimated social savings of railways were modest when compared to GDP. However, we also find that the social rate of return of railways was exceedingly high, with annual social returns being equivalent to the entire capital outlays in Nigeria, i.e., railways there had a social rate of return of around 100%. Contrary to the conventional wisdom, railways appear to have been a very good social investment in West Africa because they were cheap to build. We discuss some alternative hypotheses that may nevertheless account for why they were not adopted.