Screening and Information-Sharing by Quitzé Valenzuela-Stookey

Join us for the first event of the Microeconomics Research Seminar Series, Autumn Term 2021.

Dr Quitzé Valenzuela-Stookey from the Department of Economics, Duke University will present their research on Screening and Information-Sharing. 

Abstract 

In many settings, multiple uninformed agents bargain simultaneously with a single

informed agent in each of multiple periods. For example, workers and firms negotiate each
year over salaries, and the firm has private information about the value of workers’ output.
I study the effects of transparency in these settings; uninformed agents may observe
others’ past bargaining outcomes, e.g. wages. I show that in equilibrium, each uninformed
agent will choose in each period whether to try to separate the informed agent’s types
(screen) or receive the same outcome regardless of type (pool). In other words, the agents
engage in a form of experimentation via their bargaining strategies. There are two main
theoretical insights. First, there is a complementary screening effect: the more agents
screen in equilibrium, the lower the information rents that each will have to pay. Second,
the payoff of the informed agent will have a certain supermodularity property, which
implies that equilibria with screening are "fragile" to deviations by uninformed agents. I
apply the results to study pay-secrecy regulations and anti-discrimination policy. I show
that, surprisingly, penalties for pay discrimination may have no impact on bargaining
outcomes. I discuss how this result depends on the legal framework for discrimination
cases, and suggest changes to enhance the efficacy of anti-discrimination regulations.
In particular, anti-discrimination law should preclude the so-called "salary negotiation
defense"

This seminar will be held via Zoom. This event is open to all levels of study and is also open to the public. To register your place and gain access to the webinar, please contact the seminar organisers.

This event is part of the Microeconomics Research Seminar Series.