Isa has joined the Economics Discipline Group in 2017. He has received his PhD in economics from Penn State University in 2007 and has held academic positions at Carnegie Mellon University.
Associate Editor, Review of Economic Design, June 2013 - Present
Isa's research interests are in the areas of microeconomic theory and game theory in general, and in market design, mechanism design, auction theory and matching theory in particular.
Hafalir, I.E., Hakimov, R., Kübler, D. & Kurino, M. 2018, 'College admissions with entrance exams: Centralized versus decentralized', Journal of Economic Theory, vol. 176, pp. 886-934.View/Download from: Publisher's site
© 2018 Elsevier Inc. We study a college admissions problem in which colleges accept students by ranking students' efforts in entrance exams. Students' ability levels affect the cost of their efforts. We solve and compare equilibria of 'centralized college admissions (CCA) where students apply to all colleges and 'decentralized college admissions (DCA) where students only apply to one college. We show that lower ability students prefer DCA whereas higher ability students prefer CCA. Many predictions of the theory are supported by a lab experiment designed to test the theory, yet we find a number of differences that render DCA less attractive than CCA compared to the equilibrium benchmark.
Despotakis, S., Ravi, R., Sayedi, A. & Hafalir, I.E. 2017, 'Expertise in Online Markets', Management Science, vol. 63, no. 0025-1909(print), pp. 3895-3910.View/Download from: UTS OPUS or Publisher's site
We examine the effect of the presence of expert buyers on other buyers, the platform, and the sellers in online markets. We model buyer expertise as the ability to accurately predict the quality, or condition, of an item, modeled as its common value. We show that nonexperts may bid more aggressively, even above their expected valuation, to compensate for their lack of information. As a consequence, we obtain two interesting implications. First, auctions with a 'hard close may generate higher revenue than those with a 'soft close. Second, contrary to the linkage principle, an auction platform may obtain a higher revenue by hiding the item's common-value information from the buyers. We also consider markets where both auctions and posted prices are available and show that the presence of experts allows the sellers of high-quality items to signal their quality by choosing to sell via auctions.
© 2016. Certain aggregate externalities, like those due to knowledge and public goods, do not change very much in response to changes in two individuals' actions. Thus, individuals rationally regard the level of the externality as fixed in their negotiations with each other. We leverage this observation to develop a general framework for the existence of stable matchings in moderately sized one-to-one matching games, and we characterize intuitive restrictions on preferences that are sufficient for existence.
Chow, Y.L., Hafalir, I.E. & Yavas, A. 2015, 'Auction versus Negotiated Sale: Evidence from Real Estate Sales', Real Estate Economics, vol. 43, no. 2, pp. 432-470.View/Download from: UTS OPUS or Publisher's site
We offer a theoretical and empirical comparison of auctions and negotiatedsales. We rst build a simple model to show that auctions generate a higherrelative price than negotiated sales when demand for the asset is strong,when the asset is more homogeneous and when the asset attracts buyerswith higher valuations. Using data from property sales in Singapore, we ndsupport for our theoretical predictions. In addition, we nd that auctions do notnecessarily generate a higher price premium for foreclosed properties than fornonforeclosed properties.
Hafalir, I. & Miralles, A. 2015, 'Welfare-maximizing assignment of agents to hierarchical positions', Journal of Mathematical Economics, vol. 61, pp. 253-270.View/Download from: UTS OPUS or Publisher's site
© 2015 Elsevier B.V. We allocate agents to three kinds of hierarchical positions: top, medium, and low. No monetary transfers are allowed. We solve for the incentive-compatible (IC) mechanisms that maximize a family of weighted social welfares that includes utilitarian and Rawlsian welfares. When the market is tough (all agents bear positive risk of obtaining a low position in any IC and feasible mechanism), then the pseudomarket mechanism with equal budgets (PM) and the Boston mechanism without priorities (BM) yield identical assignments which are always optimal. Otherwise, when the market is mild, PM and BM differ and each one implements the optimal rule under different assumptions on the curvature of virtual valuations. We also establish that both BM and PM mechanisms guarantee IC Pareto-optimal assignments for a domain of preference distributions satisfying weak assumptions.
In a stylized environment with complementary products, we study a class of dominant strategy implementable direct mechanisms and focus on the objective of minimizing the expected surplus from core deviations. For this class of mechanisms, we formulate the core deviation minimization problem as a calculus of variations problem and numerically solve it for some interesting special cases. We then compare the core deviation surplus in the optimal auction (CDMA) to that in Vickrey-Clark-Groves mechanism (VCG) and core-selecting auctions (CSAs). We find that the expected surplus from core deviations can be significantly smaller in CDMA than that in both VCG and CSAs.
Ehlers, L., Hafalir, I.E., Yenmez, M.B. & Yildirim, M.A. 2014, 'School choice with controlled choice constraints: Hard bounds versus soft bounds', Journal of Economic Theory, vol. 153, pp. 648-683.View/Download from: UTS OPUS or Publisher's site
© 2014 Elsevier Inc. Controlled choice over public schools attempts giving parents selection options while maintaining diversity of different student types. In practice, diversity constraints are often enforced by setting hard upper bounds and hard lower bounds for each student type. We demonstrate that, with hard bounds, there might not exist assignments that satisfy standard fairness and non-wastefulness properties; and only constrained non-wasteful assignments that are fair for same type students can be guaranteed to exist. We introduce the student exchange algorithm that finds a constrained efficient assignment among such assignments. To achieve fair (across all types) and non-wasteful assignments, we propose control constraints to be interpreted as soft bounds–flexible limits that regulate school priorities dynamically. In this setting, (i) the student-proposing deferred acceptance algorithm produces an assignment that Pareto dominates all other fair assignments while eliciting true preferences and (ii) the school-proposing deferred acceptance algorithm finds an assignment that minimizes violations of controlled choice constraints among fair assignments.
The prevalent affirmative action policy in school choice limits the number of admitted majority students to give minority students higher chances to attend their desired schools. There have been numerous efforts to reconcile affirmative action policies with celebrated matching mechanisms such as the deferred acceptance and top trading cycles algorithms. Nevertheless, it is theoretically shown that under these algorithms, the policy based on majority quotas may be detrimental to minorities. Using simulations, we find that this is a more common phenomenon rather than a peculiarity. To circumvent the inefficiency caused by majority quotas, we offer a different interpretation of the affirmative action policies based on minority reserves. With minority reserves, schools give higher priority to minority students up to the point that the minorities fill the reserves. We compare the welfare effects of these policies. The deferred acceptance algorithm with minority reserves Pareto dominates the one with majority quotas. Our simulations, which allow for correlations between student preferences and school priorities, indicate that minorities are, on average, better off with minority reserves while adverse effects on majorities are mitigated.
Hafalir, I.E., Ravi, R. & Sayedi, A. 2012, 'A near Pareto optimal auction with budget constraints', Games and Economic Behavior, vol. 74, no. 2, pp. 699-708.View/Download from: UTS OPUS or Publisher's site
In a setup where a divisible good is to be allocated to a set of bidders with budget constraints, we introduce a mechanism in the spirit of the Vickrey auction. In the mechanism we propose, understating budgets or values is weakly dominated. Since the revenue is increasing in budgets and values, all kinds of equilibrium deviations from true valuations turn out to be beneficial to the auctioneer. We also show that ex-post Nash equilibrium of our mechanism is near Pareto optimal in the sense that all full winners values are above all full losers values
Hafalir, I.E. & Yekta, H. 2011, 'Selling goods of unknown quality: Forward versus spot auctions', Review of Economic Design, vol. 15, no. 3, pp. 245-256.View/Download from: UTS OPUS or Publisher's site
We consider an environment where the sale can take place so early that both the seller and potential buyers have the same uncertainty about the quality of the good. We present a simple model that allows the seller to offer the good for sale before or after this uncertainty is resolved, namely via forward auction or spot auction, respectively. We solve for the equilibrium of these two auctions and then compare the resulting expected revenues. We also consider the revenue implications of insurance in forward auctions. © 2011 Springer-Verlag.
Hafalir, I. & Krishna, V. 2009, 'Revenue and efficiency effects of resale in first-price auctions', Journal of Mathematical Economics, vol. 45, no. 9-10, pp. 589-602.View/Download from: Publisher's site
We study first-price auctions in a model with asymmetric, independent private values. Asymmetries lead to inefficient allocations, thereby creating a motive for resale after the auction is over. In our model, resale takes place via monopoly pricing-the winner of the auction makes a take-it-or-leave-it offer to the loser. Our goal is to compare equilibria of the first-price auction without resale (FPA) with those of the first-price auction with resale (FPAR). For the three major families of distributions for which equilibria of the FPA are available in closed form, we show that resale possibilities increase the revenue of the original seller. We also show by example that, somewhat paradoxically, resale may actually decrease efficiency. © 2008 Elsevier B.V. All rights reserved.
We study first- and second-price auctions with resale in a model with independent private values. With asymmetric bidders, the resulting inefficiencies create a motive for post-auction trade which, in our model, takes place via monopoly pricing - the winner makes a take-it-or-leave-it offer to the loser. We show (a) a first-price auction with resale has a unique monotonic equilibrium; and (b) with resale, the expected revenue from a first-price auction exceeds that from a second-price auction. The inclusion of resale possibilities thus permits a general revenue ranking of the two auctions that is not available when these are excluded.
In many matching problems, it is natural to consider that agents may have preferences not only over the set of potential partners but also over what other matches occur. Once such externalities are considered, the set of stable matchings will depend on what agents believe will happen if they deviate. In this paper, we introduce endogenously generated beliefs (which depend on the preferences). We introduce a particular notion of endogenous beliefs, called sophisticated expectations, and show that with these beliefs, stable matchings always exist. © 2008 Springer-Verlag.
A natural extension of superadditivity is not sufficient to imply that the grand coalition is efficient when externalities are present. We provide a condition, analogous to convexity, that is sufficient for the grand coalition to be efficient and show that this also implies that the (appropriately defined) core is nonempty. Moreover, we propose a mechanism which implements the most efficient partition for all coalition formation games and characterizes the resulting payoff division. © 2007 Elsevier Inc. All rights reserved.