PhD Thesis Success: Andrew Leal

Andrew Leal successfully defended his thesis this past month!

Andrew’s research explores experimental economics, behavioural economics, and game theory. Following his defence he is joining the PMG Intelligence team, a market research and data science firm as an economist.

“The Department of Economics at McMaster University and the Mestelman & Muller McMaster Decision Science Laboratory provided a stimulating intellectual home throughout my Ph.D. I am grateful to so many individuals in the department for helpful conversations, moral support, and feedback at seminars and in the hallway. I also thank the administrative staff for their patience with my many slow replies and their support with my many requests.”

Information, Incentives, and Strategic Behavior: Three Experimental Studies

Abstract

This thesis comprises three experimental studies examining how information, incentives, and strategic behavior interact in multi-agent economic environments. A common thread across the chapters is the use of laboratory experiments to test theoretical predictions in settings where one party’s choices shape the strategic environment faced by another.

Chapter 1 (joint with Seungjin Han) studies competing mechanism games in which principals can offer arbitrarily complex contracts that condition transfers on agents’ reports about competing offers. We extend the Games Played Through Agents framework of Prat and Rustichini (2003) to allow such mechanisms and establish a static folk theorem under deviator-reporting mechanisms. We design a laboratory experiment implementing these mechanisms and observe that, while most agents report truthfully, the probability of coordinated false reporting increases over the course of the experiment when incentives to lie are present.

Chapter 2 develops a new experimental framework to study how employers trade off prosocial behavior against productive ability when ranking candidates for independent jobs. Using a two-stage design in which Worker signals are generated by real participants and then evaluated by Managers under incentive-compatible elicitation, I find that Managers consistently value ability over prosocial behavior, with Managers in STEM fields placing essentially no weight on prosocial signals. Evidence of homophily emerges on the behavioral dimension: highly prosocial Managers weigh prosocial behavior substantially more than other Managers.

Chapter 3 (joint with Zhongheng Qiao) extends Bayesian Persuasion to allow Sellers to choose both an information-discloser policy and a price, as in Chen and Zhang (2020). The theoretical model yields an equilibrium in which Sellers either pool with low prices and provide no information, or fully separate with high prices and full disclosure. We design a novel experiment which confirms this sorting but identifies risk aversion rather than cost differences as the empirical driver of strategy selection.

If you’d like to follow more of Andrew’s research you can visit his website.