Person: Kotowski, Maciej
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Kotowski
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Maciej
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Kotowski, Maciej
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Publication Liquidity risk in sequential trading networks(Elsevier BV, 2018) Kariv, Shachar; Kotowski, Maciej; Leister, C. MatthewThis paper studies a model of intermediated exchange with liquidity-constrained traders. Intermediaries are embedded in a trading network and their financial capacities are private information. We characterize our model’s monotone, pure-strategy equilibrium. Agents earn positive intermediation rents in equilibrium. An experimental investigation supports the model’s baseline predictions concerning agents’ strategies, price dynamics, and the division of surplus. While private financial constraints inject uncertainty into the trading environment, our experiment suggests they are also a behavioral speed-bump, preventing traders from experiencing excessive losses due to overbidding.Publication The war of attrition and the revelation of valuable information(Elsevier BV, 2014) Kotowski, Maciej; Li, FeiWe provide a simple example demonstrating that the unconditional revelation information in a war of attrition with private budget constraints can decrease expected revenue. Our example suggests that information non-revelation can counteract the adverse revenue impact of budget constraints and almost counterbalance their otherwise negative impact.Publication On the continuous equilibria of affiliated-value, all-pay auctions with private budget constraints(Elsevier BV, 2014) Kotowski, Maciej; Li, FeiWe consider all-pay auctions in the presence of interdependent, affiliated valuations and private budget constraints. For the sealed-bid, all-pay auction we characterize a symmetric equilibrium in continuous strategies for the case of N bidders. Budget constraints encourage more aggressive bidding among participants with large endowments and intermediate valuations. We extend our results to the war of attrition where we show that budget constraints lead to a uniform amplification of equilibrium bids among bidders with sufficient endowments. An example shows that with both interdependent valuations and private budget constraints, a revenue ranking between the two auction formats is generally not possible. Equilibria with discontinuous bidding strategies are discussed.Publication Audits as Signals(University of Chicago Law Review, 2014) Kotowski, Maciej; Weisbach, David A.; Zeckhauser, RichardA broad array of law enforcement strategies, from income tax to bank regulation, involve self-reporting by regulated agents and auditing of some fraction of the reports by the regulating bureau. Standard models of self-reporting strategies assume that although bureaus only have estimates of the of an agent’s type, agents know the ability of bureaus to detect their misreports. We relax this assumption, and posit that agents only have an estimate of the auditing capabilities of bureaus. Enriching the model to allow two-sided private information changes the behavior of bureaus. A bureau that is weak at auditing, may wish to mimic a bureau that is strong. Strong bureaus may be able to signal their capabilities, but at a cost. We explore the pooling, separating, and semi-separating equilibria that result, and the policy implications. Important possible outcomes are that a cap on penalties increases compliance, audit hit rates are not informative of the quality of bureau behavior, and by mimicking strong bureaus even weak bureaus can induce compliance.Publication Bribing in First-Price Auctions: Corrigendum(Elsevier, 2013) Kotowski, Maciej; Rachmilevitch, ShiranWe clarify the sufficient condition for a trivial equilibrium to exist in the model of Rachmilevitch (2013). Rachmilevitch (2013), henceforth R13, studies the following game. Two ex ante identical players are about to participate in an independent-private-value first-price, sealed bid auction for one indivisible object. After the risk-neutral players learn their valuations but prior to the actual auction, player 1 can offer a take-it-or-leave-it (TIOLI) bribe to his opponent in exchange for the opponent dropping out of the contest. If the offer is accepted, player 1 is the only bidder and obtains the item for free; otherwise, both players compete non-cooperatively in the auction as usual. This is called the first-price TIOLI game.1 R13 shows that under the restriction to continuous and monotonic bribing strategies for player 1, any equilibrium of this game must be trivial—the equilibrium bribing function employed by player 1, if it is continuous and non-decreasing, must be identically zero. In this note, we clarify the sufficient conditions under which a trivial equilibrium exists. These are less stringent than originally proposed.Publication Endowments, Exclusion, and Exchange(Elsevier BV, 2019-09) Balbuzanov, Ivan; Kotowski, MaciejWe propose a new solution for discrete exchange economies and resource-allocation problems, the exclusion core. The exclusion core rests upon a foundational idea in the legal understanding of property, the right to exclude others. By reinterpreting endowments as a distribution of exclusion rights, rather than as bundles of goods, our analysis extends to economies with qualified property rights, joint ownership, and social hierarchies. The exclusion core is characterized by a generalized top trading cycle algorithm in a large class of economies, including those featuring private, public, and mixed ownership. It is neither weaker nor stronger than the strong core.