Joe S. Ballard - Research

Publications

"Dynamic Coordination with Switching Costs" (with Luke Boosey), Games and Economic Behavior, Accepted. (Online Appendix, Replication Package)

Abstract: We study dynamic coordination with costly switching, where players are initially uncertain regarding how to coordinate. We model two players searching for compatible platforms in the presence of two kinds of frictions: noisy outcomes and costly switching. The model predicts that players remain on their current platforms whenever their common belief is sufficiently optimistic; otherwise, they randomize their actions, switching with higher probability whenever they are more pessimistic about compatibility, switching is less costly, or success conditional on compatibility is more likely. In an experiment, we vary (i) whether success is Deterministic or Stochastic when players are on compatible platforms and (ii) the cost of switching. We allow subjects to choose explicit mixed strategies to provide a better test of the theory. The data are consistent with most comparative statics predictions, particularly in the Deterministic case, but differ from some of the other theoretical predictions. To explain the disparities between theory and the data, particularly when learning is noisy and switching is costly, we discuss the impacts of several factors, including cognitive ability, inattention, sensitivity to recent failures, and experience.

Working Papers

"Competence, Mistrust, and Costly Checking in Advisory Relationships," In preparation.

Abstract: I consider an infinite-horizon, repeated advice environment, where an adviser of privately known expertise, either competent or incompetent, recommends one of two options to a decision maker in each period. The decision maker chooses whether to “check” the adviser’s recommendation prior to implementation in every period and then, following the public outcome, either continues or terminates the relationship. When checking is too costly, termination is the only instrument used in equilibrium, resulting in inefficient termination of competent advisers. When checking is sufficiently cheap, the decision maker never terminates the relationship, but frequent (costly) checking may occur. If competent advisers receive fully informative signals, an efficient, cooperative equilibrium can be supported through the use of continual checking (for low checking costs) or termination (for high checking costs), but this is no longer possible under a partially informative signal structure. In this case, the welfare of both competent advisers and decision makers can be improved when checking is cheaper, as this enables the use of probationary phases following bad outcomes.

Work in Progress

"Fairness Ideals and Adaptation in Repeated Bargaining" (with Luke Boosey), Data collection in progress.
"Gender Differences and the Role of Feedback in Advice Giving" (with Sakshi Upadhyay), Data collection in progress.
"Clarity and Adaptation in Relational Contracts with Guiding Principles" (with Luke Boosey), Theory & design phase.
"Incentivizing Experimentation," Theory & design phase.