Publications

Working Papers (see also at SSRN):

• “From Economic Power to Political Power“; TILEC Discussion Paper 2025-07.
  • This paper investigates the conditions under which powerful private actors, such as multinational technology firms or wealthy individuals, can openly challenge the authority of sovereign governments, using a conflict between Elon Musk and the Brazilian Supreme Court in 2024 as a case study. We construct a series of game-theoretic models to analyze how co-investment in public infrastructure by private firms can create vulnerabilities for states, especially in digital markets, where services can be withdrawn at short notice. The models reveal that a firm’s economic power can translate into political power when governments become dependent on private investment, and that repeated interactions increase the risk of such confrontations. Empirical illustrations—including cases involving Google, Meta, and OpenAI—underscore the growing potential for corporate actors to exert political influence, sometimes even at the expense of profit. The paper concludes with policy recommendations to mitigate the risks of private actors undermining democratic governance.
• “Economic Governance and Institutional Design“; TILEC Discussion Paper 2024-10. CCP Policy Brief.
  • What are institutions, and how should they be designed to achieve compliance with behavioral rules, including laws, social norms, religious rules, or cultural traditions? This conceptual paper introduces a typology of economic governance institutions and explains how it can be used both by policy makers, administrators, and researchers in law and economics to improve rule compliance. It explains how effective and efficient institutions can be identified for a given economic governance problem. The concepts are applied to two cases: how to create trust in cloud computing technologies, and how to implement data sharing of user-generated information on data-driven markets?

• “Regulation of Digital Platforms and the State’s Use of Platform Technologies in China” (with Inge Graef and Doh-Shin Jeon); TILEC Discussion Paper 2024-05, CCP Perspective Paper 24-01.
  • Platform technologies (Artificial Intelligence and Data Analytics) are not only used in the West but also in autocratic countries. While the major players in the West are privately-owned big tech firms, in autocratic countries the government assumes a much more active role. China is the most advanced of these countries. This report takes stock of China’s current state of digital platform markets and regulation of platform technologies, including a series of recent governmental interventions and a description of the Chinese Central Bank Digital Currency. It also offers a view on the current use of platform technologies by the Chinese government and the Chinese Communist Party (CCP), including Social Credit Systems and the surveillance state. Based on these insights, we identify key challenges for EU policy makers and formulate crucial questions for future (more quantitative) research.

• “Social Media and Democracy: Experimental Results” (with Freek van Gils and Wieland Müller); CCP Working Paper No. 23-04. Policy Brief (2 pages).
  •  Social media have become a main source of information for many voters. Political interest groups on social media platforms have the ability to (i) microtarget news based on individual-level voter data and (ii) obfuscate their identities, which can be exploited to spread disinformation. Two proposed interventions to prevent election manipulation by disinformation are a microtargeting ban and disclosure requirements. We experimentally study the implementation of both interventions in a social media environment on voting behavior. Our results show that mandatory disclosure of interests, in combination with or without a microtargeting ban, increases the efficiency of aggregate voter decision-making. However, only the combination of disclosure of interests and a microtargeting ban counteracts election manipulation. The implementation of a microtargeting ban without disclosure requirements has adverse effects.

• “The Nonprofit’s Dilemma” (with Yilong Xu); TILEC Discussion Paper No. 2021-012, CentER Discussion Paper No. 2021-021.
  • Nonprofit firms producing services that are of broad public concern — mission-driven organizations — pay lower wages and often use low-powered incentive schemes, which has been explained by binding financial constraints and the threat to attract wrong worker types if wages are increased. Yet, they face higher labor turnover than for-profit firms, which is very costly. We construct a simple model that reproduces these stylized facts, explains the high labor turnover of mission-driven organizations, and suggests a way out of this nonprofit’s dilemma, based on insights from the economic psychology literature. We construct testable empirical hypotheses and offer managerial and policy implications.

Work in Progress:

• “Clash of Classification Institutions” (with Gillian Hadfield and Vatsalya Srivastava)
  • Classification institutions assign a normative label, acceptable or wrongful, to human behavior: laws, social norms, religious rules, cultural traditions, etc. Thereby they shape the expectations about other people’s behavior, reduce uncertainty, and create trust in other’s actions. We construct a dynamic model where two classification institutions with different enforcement mechanisms, social norms and legal order, clash. We show how laws crowd out norms, and when and how norms decay gradually, where more and more players first stop enforcing and then stop complying with the norm as time proceeds. We also show that the existence of legal order can undermine norms, even if legal order cannot enforce its own laws very effectively. In such a case, players may rationally ignore the classification of both norms and laws and engage in novel behavior, implying the breakdown of both governance mechanisms. Finally, we apply the model to issues of immigration, developing countries and colonization, former Soviet republics, failed states, and how to organize a multicultural society.

• “Voluntary algorithmic censorship: A comparative institutional analysis of sensitive prompt responses in DeepSeek and ChatGPT” (with Kun He and Pratiksha Ashok)
• “Classification Through Thick and Thin: Permissive Norms and Strict Laws” (with Gillian Hadfield and Vatsalya Srivastava)
• “The Proper Scope of Government in Hospitals” (with Lapo Filistrucchi and Phuc Phung)
• “A Test for Data-Drivenness of Markets” (with Tobias Klein, Madina Kurmangaliyeva, and Patricia Prüfer)
• “Collusion and Communication” (with Cedric Argenton and Wieland Müller)

Retired/Dormant Papers:

• “Innovation Contests“

  An earlier version was formerly distributed under the title “Semi-Public Competitions”; CentER Discussion Paper, No. 2009-33; TILEC Discussion Paper, No. 2008-023.

  • The process of innovation is driven by two main factors: new inventions and institutions supporting the transformation of inventions into marketable innovations. This paper studies such an institution, called an innovation contest, and shows that it can mitigate a dilemma on the market for ideas. The sponsor of an innovation contest publicizes the ranking of winners, which motivates entrepreneurs to participate in the contest. But information about losers remains private with the sponsor. This allows him to place better informed bids on valuable losers’ projects. Efficiency increases because both entrepreneurs and investors have better incentives to enter the market.