Xiaomin Bian

WORKING PAPERS

Exclusion with Committed Prices and Its Experimental Study (Job Market Paper)

Vertical contracts prohibiting a seller’s customers from dealing with rival sellers have been controversial in antitrust economics. In our settings, when the exclusive contract is a bundle of a committed price and a transfer, the incumbent could deter entry successfully by committing a price lower than its cost and charging money from buyers. The incumbent prefers to offer contracts for longer periods since the longer the contract, the harder the potential entrant to enter the market in early periods. Furthermore, we check whether exclusion could be successful in a laboratory experiment and find that successful exclusion is achieved even if participants do not behave on the equilibrium path. When contracts on the equilibrium path are offered, the likelihood of exclusion increases as the robustness of strategic uncertainty increases. Though incumbents do not design contracts on the equilibrium path, they offer contracts to accomplish exclusion. Thus, policies to prohibit exclusion are essential since exclusion is successful both theoretically and experimentally.

Gender Manipulation (with OSub Kwon)

There are many situations in which people can choose which “gender” to use to represent themselves. To understand whether such a choice of gender can benefit the decision-maker, we run a dictator game experiment in the lab where the recipients choose a gender to represent themselves before the dictator makes the decision. We use a procedure through which recipients can choose the gender of their avatars while holding nearly all else constant. We find that female avatars are generally treated better by dictators, and both male and female recipients choose female avatars more often. Based on reported beliefs, this choice appears to be strategic for men but non-strategic for women. Besides, our experimental design provides a new way of studying how a decision-maker treats genders differently in the lab.  “Fake” photos convey gender information properly and control other information that may affect the decision-maker’s choices.

WORK IN PROGRESS

Collusion in Public Good Provision

In a public good provision setting, motivating agents to reveal their true tastes is essential for social welfare. This paper shows that the principal can always design a mechanism to make collusion nonprofitable for agents in the case of collusive contracts offered by a third party, from one agent to the other agent or one agent delegation. The principal could prevent collusion at no cost and realize the second-best social welfare outcome when agents’ types are uncorrelated. However, when agents’ types are positively correlated, the principal needs to pay some cost to prevent collusion. In a laboratory experiment, we check agents’ collusive behaviors. Our mechanism helps agents reveal their true types and prevent collusion effectively. When contracts are offered exogenously, fairness is agents’ top consideration to accept or reject the contracts. Nevertheless, when agents can design their contracts, they consider more on their own benefits.

Women Feel Isolated with Group Identity

People who are members of a group behave differently from people who perceive themselves as individuals. This paper shows that men and women react differently towards their group memberships. In a hidden-action trust game, women cooperate more and react more positively to promises than men when playing as individuals. However, when the group identity of the paired player is announced, men tend to realize that group identity tries to isolate them, and thus, they cooperate more in-group and out-group to fight against this effect. On the contrary, women feel more isolated with group identity and refuse to cooperate.

Gender Differences in Cooperation and Competition after Being “Disenfranchised”

Low promotability tasks occupy workers’ time to work for tasks influencing their performance evaluation and position promotion. We use a lab experiment to check whether a low promotability task will generate gender differences in later behaviors. We expect that women will be less cooperative and more competitive after the low promotability task, especially when the task is assigned by a manager or volunteered. When the task is randomly assigned, we expect minor behavior differences before and after the task. Low promotability tasks hurt women when working on them and have long-lasting effects on later performances. Less cooperative behavior is harmful to teamwork and leads to low efficiency. Though more willingness to compete seems beneficial at first glance, the hostility and competitiveness built within the group also result in lower efficiency for teamwork. When low promotability tasks are unavoidable, it is better to assign tasks randomly to help hold good relationships within the group and guarantee workers’ equal opportunity to pursue progress in their organizations. 

Reputation Barrier and Fractional Searching (with Shuchen Zhao)

With the development of online marketplaces, a reputation system acts as an essential tool to lower searching costs and improve market efficiency. However, potential entrants face a “cold start” problem to enter the market under the reputation system since buyers are prone to choose more popular and higher-rated products. We propose a fractional searching mechanism, which lists only part of the searching results, to increase the exposure of new entrants’ products and help them enter successfully. In a laboratory experiment, we check the effectiveness of the reputation system and the fractional searching mechanism. We expect that buyers purchase more from the incumbent in a information market. However, fractional searching helps the entrant survive in the market and build up the reputation. Fractional searching acts as an efficient tool to accommodate entry.