Elena Istomina
Hi! I am an economist working in applied microeconmic theory. I received my PhD in economics from the University of Chicago in 2024.
My research focuses on incentives shaping how information is acquired and used strategically. I am particularly intersted in how these informational incentives reshape classical problems in industrial organization, including pricing, product design and screening.
Main research fields: Microeconomic Theory, Industrial Organization.
Research
Working Papers
(Previously circulated as Sorting Stock Through Sales: Inventory Turnover and Outlets)
Abstract: I model markdown pricing as a tool for indirect price discrimination by product value. New inventory is introduced at higher prices, and unsold goods are gradually marked down. Consumers arrive sequentially, choose a price, inspect a random good, observe its value, and decide whether to purchase. Negative selection of unsold goods endogenously sorts products across markdown tiers. I introduce and characterize sorting equilibria that link together prices, consumer decisions, and product sorting. Equilibrium payoffs depend only on a single statistic: the decline in inventory quality between the initial and terminal tiers. Greater sorting reduces sales and total welfare.
(Revision requested at Games and Economic Behavior Journal)
Abstract: The paper analyzes a monopolistic screening model in which the seller learns the buyer's preferences through costly and noisy communication and selects an option on the buyer's behalf. Under suitable regularity conditions, the joint problem of communication and menu design reduces to a rational inattention problem over the buyer's virtual type. This equivalence shows how costly communication interacts with information rents. Costly communication may improve or worsen allocative efficiency, depending on the distribution of types and production costs. When marginal production costs are convex, the seller chooses communication that is wastefully precise.
Abstract: I model an uninformed seller selling an object to an informed buyer when completing the transaction takes time and effort. The buyer exerts costly effort to speed up the closing stage of the deal. The seller updates her beliefs about the buyer's willingness to pay as time passes, and adjusts prices accordingly. Smooth equilibrium dynamics are only possible when the timing of the deal reveals no information or when the low-type buyer never exerts additional effort. Otherwise, every monotone equilibrium features tipping points. These tipping points arise because the low-type buyer optimally increases his effort discontinuously once the seller becomes sufficiently pessimistic. I also show that anticipation of the discrete improvements in the terms of trade at the tipping point may generate temporary market freezes, followed by a sudden burst of activity.
Inactive Research
Abstract: I analyze a monopolistic screening model, where the buyer's type is initially unknown to both market sides. The seller engages in costless sequential communication with the buyer before presenting a final product offer. At each communication period, the seller selects a threshold and discloses to the buyer whether his type is above or below it. The optimal strategy for the seller is to gradually disclose information about the buyer's type, starting from the bottom. Compared to the standard monopolistic screening, this approach enables the seller to extract the entire surplus not only from the lowest served type but from a whole range of lower types. I also introduce an analog of a virtual type for a learning-buyer environment and examine the consequences of the buyer's limited knowledge for consumer welfare.
†This paper was anticipated by Heumann (2020) .