Researcher:
Koçkesen, Levent

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Levent

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Koçkesen

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Koçkesen, Levent

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2007 - 200922010 - 20206

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Researcher Of Publications: search.filters.isAuthorOfPublication.96572042-0c7c-4ac1-b2d5-9cfa558a5d5b

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Now showing 1 - 8 of 8
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    The role of verifiability and privacy in the strategic provision of performance feedback: theory and experimental evidence
    (Academic Press Inc Elsevier Science, 2016) Ozdemir, Duygu; Department of Economics; Department of Economics; Ertaç, Seda; Koçkesen, Levent; Faculty Member; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; College of Administrative Sciences and Economics; 107102; 37861
    We theoretically and experimentally analyze the role of verifiability and privacy in strategic performance feedback using a "one principal-two agent" context with real effort. We confirm the theoretical prediction that information transmission occurs only in verifiable feedback mechanisms and private-verifiable feedback is the most informative mechanism. Yet, subjects also exhibit some behavior that cannot be explained by our baseline model, such as telling the truth even when this will definitely hurt them, interpreting "no feedback" more optimistically than they should, and being influenced by feedback given to the other agent. We show that a model with individual-specific lying costs and naive agents can account for some, but not all, of these findings. We conclude that although agents do take into account the principal's strategic behavior to form beliefs in a Bayesian fashion, they are overly optimistic and interpret positive feedback to the other agent more pessimistically than they should. (C) 2016 Elsevier Inc. All rights reserved.
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    Litigation and settlement under judicial agency
    (Elsevier Science Inc, 2012) N/A; Department of Economics; Department of Economics; Koçkesen, Levent; Usman, Ali Murat; Faculty Member; Teaching Faculty; Department of Economics; College of Administrative Sciences and Economics; College of Administrative Sciences and Economics; 37861; 100999
    We model the settlement of a legal dispute when the trial outcome depends on the behavior of a strategically motivated judge. A defendant, who is uninformed about the level of harm that he has caused, makes a take-it-or-leave-it offer to an informed plaintiff. If the parties cannot agree on a settlement and the case goes to trial, the judge decides how much effort to exert in discovering the actual damages. We show that, under very general assumptions, this model exhibits multiple equilibria. In some equilibria, the judge exerts less effort and more cases settle out of court, whereas in others the opposite occurs. We also show that the judge prefers the low effort equilibria with high settlement rate and argue that a "managerial judge" could easily steer the parties towards low effort equilibria. This may be deemed undesirable, since in low-effort equilibria, the terms of the settlement heavily favor the informed plaintiff, and this in turn induces over-investment in ex ante preventive care by the defendant.
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    Unobservable contracts as precommitments
    (Springer, 2007) N/A; Department of Economics; Koçkesen, Levent; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 37861
    It is well known that signing publicly observable contracts with third parties is a means of credibly committing to certain actions and hence may yield strategic advantages. Previous work on the commitment value of unobservable contracts has been limited to normal form games and extensive form games in which only one party has the option to sign a contract. in this paper, we extend the analysis to extensive form games in which both players can sign contracts, and characterize the set of sequential equilibria. We show that any Nash equilibrium outcome of the original game in which both players receive more than their individually rational payoffs can be supported as a sequential equilibrium outcome. therefore, delegation acts not only as a commitment device to gain advantage over the opponent, but also as a cooperative device to attain Pareto improvements over the subgame perfect equilibrium outcome.
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    Commitment without reputation: renegotiation-proof contracts under asymmetric information
    (Springer Heidelberg, 2015) Gerratana, Emanuele; Department of Economics; Koçkesen, Levent; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 37861
    This paper characterizes equilibrium outcomes of extensive form games with incomplete information in which players sign renegotiable contracts with third parties. Our aim is to understand the extent to which third-party contracts can be used as commitment devices when it is impossible to commit not to renegotiate them. We characterize renegotiation-proof contracts and strategies for extensive form games with incomplete information and apply our results to two-stage games. If contracts are observable, then the second mover obtains the best possible payoff given that she plays an incentive compatible and renegotiation-proof strategy and the first mover best responds. If contracts are unobservable, then any Bayesian Nash equilibrium outcome of the original game in which the second mover plays an incentive compatible and renegotiation-proof strategy can be supported. We apply our results to Stackelberg competition and show that renegotiation-proofness imposes a very simple restriction.
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    Strategic effects of renegotiation-proof contracts
    (Walter De Gruyter Gmbh, 2012) Gerratana, Emanuele; Department of Economics; Koçkesen, Levent; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 37861
    It is well known that non-renegotiable contracts with third parties may have an effect on the outcome of a strategic interaction and thus serve as a commitment device. We address this issue when contracts are renegotiable. More precisely, we analyze the equilibrium outcomes of two-stage games with renegotiation-proof third-party contracts in relation to the equilibrium outcomes of the same game without contracts. We assume that one of the parties in the contractual relationship is unable to observe everything that happens in the game when played by the other party. We first show that when contracts are non-renegotiable, the set of equilibrium outcomes of the game with contracts is restricted to a subset of Nash equilibrium outcomes of the original game. Introducing renegotiation, in general, imposes further constraints and in some games implies that only subgame perfect equilibrium outcomes of the original game can be supported. However, there is a large class of games in which non-subgame perfect equilibrium outcomes can also be supported, and hence, third-party contracts still have strategic implications even when they are renegotiable.
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    Bargaining and exclusivity in a borrower-lender relationship
    (Springer Nature, 2007) Ozerturk, Saltuk; Department of Economics; Koçkesen, Levent; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 37861
    This paper presents a stylized model of a borrower-lender relationship where funds are gradually invested in a project with uncertain return. We show that an exclusive financing relationship arises endogenously in equilibrium due to initial lender's superior information on the project's progress. The analysis also identifies a novel distortionary effect of exclusivity and the consequent loss of future rents on the ex-ante choices of the borrower. When she chooses the amount of funds to be initially invested in the project, the borrower chooses to overinvest making the future rent extraction by the initial lender as costly as possible.
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    PublicationOpen Access
    Strategic effects of renegotiation-proof contracts
    (De Gruyter, 2012) Gerratana, Emanuele; Department of Economics; Koçkesen, Levent; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 37861
    It is well known that non-renegotiable contracts with third parties may have an effect on the outcome of a strategic interaction and thus serve as a commitment device. We address this issue when contracts are renegotiable. More precisely, we analyze the equilibrium outcomes of two-stage games with renegotiation-proof third-party contracts in relation to the equilibrium outcomes of the same game without contracts. We assume that one of the parties in the contractual relationship is unable to observe everything that happens in the game when played by the other party. We first show that when contracts are non-renegotiable, the set of equilibrium outcomes of the game with contracts is restricted to a subset of Nash equilibrium outcomes of the original game. Introducing renegotiation, in general, imposes further constraints and in some games implies that only subgame perfect equilibrium outcomes of the original game can be supported. However, there is a large class of games in which non-subgame perfect equilibrium outcomes can also be supported, and hence, third-party contracts still have strategic implications even when they are renegotiable.
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    PublicationOpen Access
    Starting small to communicate
    (Elsevier, 2020) Kubilay, Elif; Department of Economics; Atakan, Alp Enver; Koçkesen, Levent; Faculty Member; Faculty Member; Department of Economics; College of Administrative Sciences and Economics; 39383; 37861
    We analyze a repeated cheap-talk game in which the receiver is privately informed about the conflict of interest between herself and the sender and either the sender or the receiver controls the stakes involved in their relationship. We focus on payoff-dominant equilibria that satisfy a Markovian property and show that if the potential conflict of interest is large, then the stakes increase over time, i.e., “starting small” is the unique equilibrium arrangement. In each period, the receiver plays the sender's ideal action with positive probability and the sender provides full information as long as he has always observed his ideal actions in the past. We also show that as the potential conflict of interest increases, the extent to which the stakes are back-loaded increases, i.e., stakes are initially smaller but grow faster.