Haruvy, Ernan

Permanent URI for this collectionhttps://hdl.handle.net/10735.1/3931

Ernan Haruvy is an Associate Professor of Management. His research interests include:

  • E-commerce
  • Market design
  • Auctions
  • Network externalities
  • Experimental economics
Discover more about Professor Haruvy on his Home and Research Explorer pages.


Recent Submissions

Now showing 1 - 3 of 3
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    Relationship-Specific Investment and Hold-Up Problems in Supply Chains: Theory and Experiments
    (Springer, 2018-07-20) Haruvy, Ernan; Katok, Elena; Ma, Zhongwen; Sethi, Suresh; 0000-0002-7037-7896 (Katok, E); Haruvy, Ernan; Katok, Elena; Ma, Zhongwen; Sethi, Suresh
    Supply chains today routinely use third parties for many strategic activities, such as manufacturing, R&D, or software development. These activities often include relationship-specific investment on the part of the vendor, while final outcomes can be uncertain. Therefore, writing complete contracts for such arrangements is often not feasible, but incomplete contracts, especially when relationship-specific investment is required, may leave the supplier vulnerable to a version of the “hold-up problem,” which is known to result in sub-optimal levels of investment. We model the phenomenon as a sequential move game with asymmetric information. Absent behavioral considerations, the unique Perfect Bayesian Equilibrium implies zero investment. However, with social preferences, the hold-up problem may be mitigated. We propose a model that incorporates social preferences and random errors, and solve for the equilibrium. In addition, we look at reputation and find it to be effective for increasing investment. We conduct laboratory experiments with human subjects and find that a model with social preferences and random errors organizes our data well. © 2018, The Author(s).
  • Item
    A Psychological Reexamination of the Bertrand Paradox
    (Univ North Carolina) Fatas, Enrique; Haruvy, Ernan; Morales, Antonio J.; 205185198 (Haruvy, E)
    The Bertrand paradox describes a situation in which two competing firms reach an outcome where both price at marginal cost. In laboratory experiments, this equilibrium is not generally observed. Existing empirical works on Bertrand competition have found evidence for boundedly rational models. We find that such models are useful in organizing behavior in early stages of the game, but less so in later stages. We show that a new model, coarse grid Nash equilibrium, based on the assumption that subjects discretize the strategy space, explains the data better.
  • Item
    Tiers in One-Sided Matching Markets: Theory and Experimental Investigation
    Wang, Y.; Haruvy, Ernan; 205185198 (Haruvy, E)
    The design of a matching market may affect behavior in prematch stages. In some settings, forward-looking agents might purchase low-priced properties with the intention of trading up. From a design standpoint, such behavior is undesirable. We investigate a tiered structure as a potential solution. Using a model that endogenizes prematch acquisition decisions, we show that tiers promote exchange while protecting the primary market. In the laboratory, we find that both firm revenue and total social surplus are improved by tiered matching, and the amount of improvement depends on the exchange mechanism the firm uses. We focus on two popular mechanisms-deposit first and request first. We find that subjects are less likely to take advantage of the match under tier-free deposit first mechanism, possibly because of risk aversion. Thus, a tiered approach is more critical under the request first mechanism. We confirm that risk aversion partly explains deviations from theory.

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