Kai Hao Yang [khyang@uchicago.edu]

I am a PhD candidate in the economics department at the University of Chicago. I study microeconomic theory, in particular, mechanism design, information design and auction theory

From July, I will start as a postdoctoral associate at the Cowles Foundation, Yale University. I will join the economics group at Yale School of Management as an assistant professor in July 2021.

 

 

 

 

 

Research


Working Papers


(Job Market Paper, Last Update: 01/12/2020) Abstract

A data broker sells market segmentations created by consumer data to a producer with private production cost who sells a product to a unit mass of consumers with heterogeneous values. In this setting, I completely characterize the revenue-maximizing mechanisms for the data broker. In particular, every optimal mechanism induces “quasi-perfect price discrimination” . That is, the data broker sells the producer a market segmentation described by a cost-dependent cutoff, such that all the consumers with values above the cutoff end up buying and paying their values while the rest of consumers do not buy. The characterization of optimal mechanisms leads to additional economically relevant implications. I show that the induced market outcomes remain unchanged even if the data broker becomes more active in the product market by gaining the ability to contract on prices; or by becoming an exclusive retailer, who purchases both the product and the exclusive right to sell the product from the producer, and then sells to the consumers directly. Moreover, vertical integration between the data broker and the producer is Pareto-improving, since consumer surplus is zero under any optimal mechanism. 

(First Draft: 04/15/2018; Last Update: 11/21/2019) Abstract

An intermediary has the technology to provide information about a product to consumers and serves as a platform through which transactions between a monopoly and consumers take place. This paper explores the intermediary's revenue maximization problem across all possible business models. By examining the revenue maximizing solutions under three critical business models, I discover that the market outcomes---consumers' expected surplus, producer's expected profit and the intermediary's expected revenue---are equivalent across all business models if and only if the gains from trade are large enough, which provides some insights into, and implications for online selling platforms.

(First Draft: 06/20/2017; Last Update: 07/10/2019; Submitted) Abstract

This paper explores the buyer-optimal information structures in a monopolistic screening context with nonlinear production technology. It shows that the buyer’s optimal surplus may increase even when the production cost becomes more uncertain or when the efficient surplus decreases. Under a binary prior, this paper further shows that the buyer-optimal information structures must lie in a family described by truncated Pareto distributions. Such characterization effectively reduces the surplus maximization problem to a monopsony’s pricing problem, which further implies that the buyer-optimal surplus is quasi-convex in technologies that are ranked by the rotational order.

(First Draft: 02/25/2018; Last Update: 11/14/2019) Abstract

In an environment that features second-degree price discrimination, this paper fully characterizes the set of surplus divisions that can arise from all possible information consumers have about their valuation. By extending the techniques developed in a companion paper (Yang, 2019a), I show that the set of feasible surplus divisions can be characterized by a family of information structures that induce Pareto-distributed interim expected values. Unlike the linear model as in Roesler & Szentes (2017) where posted price is always optimal, the efficient frontier is generically not attainable under any information structures and there are environments in which a (nontrival) subset of the feasible surplus divisions collapses to a one-dimensional set. Nevertheless, the sets of feasible surplus divisions are stable around the linear environments.

(First Draft: 03/20/2016; Last Update: 04/20/2017) Abstract

In this paper, without fully specifying the underlying game form, we showed that the probability of an inefficient breakdown in any bilateral crisis bargaining model is smaller when the more informed party has more bargaining power. Moreover, introduction of additional private information does not necessarily lead to extra efficiency loss. Several implications can be drawn from these results. Specifically, regarding international security, reducing incomplete information is not the only way to reduce the probability of war. Instead, reallocating bargaining power properly would also be effective in terms of preventing conflicts. Furthermore, these results also provide a formal justification for the power transition theory as the status-quo power can be interpreted as the party with more bargaining power when the information structure shifts due to power transition.

(First Draft: 09/28/2015; Last Update: 04/20/2017) Abstract

This paper investigates the strategic interactions between the counter proliferator and the proliferator in a nuclear proliferation crisis, as well as their impacts on international security and stability. A baseline model of contest with interdependent values is established and its implications are discussed. Furthermore, we characterize the equilibria in a class of models in a "detail-free" fashion and analyze equilibrium outcomes, with particular attentions to international stability and likelihood of a successful development. It thus yields some results and implications that are robust to game forms and model details and provides several generalizations and insights to the effects of various counter-proliferation measures as well as the consequences of nuclear proliferation.


Short Notes


  • A Note on Sequential Hyperstability. (with Philip Reny, draft coming soon) Abstract
     A set of behavior strategy profiles is sequentially-hyperstable” if it is a minimal set of strategies for which any perturbed game has a nearby sequential equilibrium strategy profile. We show that every extensive form game with perfect recall has a sequentially-hyperstable set that is contained in a single connected component of Nash equilibria. Furthermore, we also conclude that every normal form game has a connected component of Nash equilibria such that every elements in this set induces a sequential equilibrium outcome in any extensive form game that has this normal form representation.