Nenad Kos and the Aspiration to Explain Behaviors with Economics

AN ASSOCIATE PROFESSOR OF ECONOMICS, THE SLOVENIAN SCHOLAR STUDIES THE FUNCTIONING OF ECONOMIC INSTITUTIONS

When he was a Ph.D. student, his aspiration was to model human behavior in economic terms. That is what Nenad Kos, Associate Professor at the Department of Economics, is doing at Bocconi University, where he inquires about the functioning of economic institutions. He grew up in a small Slovenian town called Gornja Radgona. After a bachelor of arts in Economics at the University of Ljubljana, he applied for a Ph.D. in Economics at the Northwestern University in Evanston, Illinois. He is a member of the Bocconi faculty since 2008.
 
Part of Professor Kos’ work is devoted to corporate takeovers. In the paper Information in tender offers with a large shareholder (published in Econometrica in 2016 jointly with Mehmet Ekmekci, doi: 10.3982/ECTA11059), he developed a model of takeovers of firms that can also account for large shareholders, in addition to many small shareholders. He then studied the interplay between the dispersion of the shareholding and information asymmetry. In a striking result he showed that “The raider can make a profit when the private information about the post-takeover value is dispersed and the large shareholder is large enough”.
 
Professor Kos has also studied The design of ambiguous mechanisms in the paper with Alfredo Di Tillio and Matthias Messner, forthcoming in The Review of Economic Studies, doi: 10.1093/restud/rdw051. The research applies ambiguity aversion models to mechanism design - ambiguity aversion models lack of information and the agent’s aversion towards it. Let’s imagine a model in which a seller is selling an object to a single buyer. Facing an ambiguity averse buyer may be arduous for the seller: people shy away from alternatives if they lack the necessary information to form a belief about the consequences of their actions. However, somewhat counterintuitively, “the designer of an institution can benefit by withholding some information and designing what we call an ambiguous mechanism. This is a mechanism where some features are hidden so that the agent does not know how the results will affect him”. The research has consequences on settings such as bilateral trade, optimal taxation and auctions.
 
Professor Kos is currently conducting research on bargaining with Sarah Auster of Bocconi’s Department of Decision Sciences and Salvatore Piccolo from University of Bergamo. He is focusing on contexts when agents invest into their bargaining technology, either by educating themselves on how to bargain or by employing someone else to bargain on their behalf. Some examples are divorce lawyers or a real estate agent involved in buying a home. “We developed a model to test how the hiring of these agents affects bargaining”.

by Claudio Todesco