MARCO M. OTTAVIANI

Forthcoming Quarterly Journal of Economics

Model of nonmarket allocation of resources such as the awarding of grants to meritorious projects, honors to outstanding students, or journal slots to quality publications.

Key theoretical novelty: Lehmann (1988) information as a tractable tool for general comparative statics.

Main prediction of the model: Participation in a field increases as evaluation in that field becomes noisier & as evaluation in other fields becomes less noisy.

Key empirical result: Prediction confirmed in the data exploiting 2014 change in budget apportionment rule at the ERC.  

• Grantmaking, Grading on a Curve, and the Paradox of Relative Evaluation in Nonmarkets (1.194 Kb)

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In a number of markets, competing product providers compensate sales agents and advisors through nonlinear incentive schemes with bonuses. How should policy makers regulate nonlinear incentives in markets with advice? Is it enough to step up liability or should the shape of the compensation structure of advisors be regulated more directly?

• When Liability is Not Enough: Regulating Bonus Payments in Markets With Advice (501 Kb)
• [Online Appendix] (407 Kb)

This chapter, prepared for Volume 4 of the Handbook of Industrial Organization, overviews contributions to the industrial organization of information markets and nonmarkets, while attempting to maintain a balance between foundational frameworks and more recent developments. We start by reviewing mechanism-design approaches to modeling the trade of information. We then cover ratings, predictions, and recommender systems. We turn to forecasting contests, prediction markets, and other institutions designed for collecting and aggregating information from decentralized participants. Finally, we discuss science as a prototypical information nonmarket with participants who interact in a non-anonymous way to produce and disseminate information. 

• Information Markets and Nonmarkets (635 Kb)

How should multiple and possibly heterogeneous risky projects be optimally grouped into separately financed conglomerates?

• Separate or Joint Financing? Optimal Conglomeration with Bankruptcy Costs (253 Kb)

How should a principal provide agents with incentives to conduct sequential search?

• Search Agency (220 Kb)

Timing of parimutuel bets driven by two incentives: bettors want to place large early bets to pre-empt the rivals, but also want to wait to conceal information.

• The Timing of Parimutuel Bets (323 Kb)

Comparison of equilibrium outcomes in parimutuel and fixed-odds competitive markets with privately informed bettors.

• Parimutuel versus Fixed-Odds Markets (165 Kb)

Characterization of equilibrium in Hotelling location model with private information, with applications to strategic forecasting and political economy.

• Forecasting and Rank-Order Contests (352 Kb)

How is downstream competition affected by the contractual terms used to sell essential inputs to competitors?

• Contracts and Competition in the Pay-TV Market (346 Kb)

Analysis of issues relevant for regulation of independent financial advisers: communication to unsophisticated audience, information acquisition by advisers, uncertainty about the conflict of interest, and optimal incentive design.

• The Economics of Advice (334 Kb)