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Yeon-Koo Che

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Yeon-Koo Che
Academic career
FieldMicroeconomic theory
InstitutionColumbia University
Alma materStanford University

University of Toronto

Seoul National University
Doctoral
advisor		Paul Milgrom
Information at IDEAS / RePEc

Yeon-Koo Che is an economist. He is the Kelvin J. Lancaster Professor of Economic Theory at Columbia University, a position he held since 2009. Prior to joining Columbia in 2005, he was a professor at University of Wisconsin-Madison.


Education

He earned his BA in economics from Seoul National University in 1984, his MA from University of Toronto in 1986. He received his Ph.D. from Stanford University in 1991, with Paul Milgrom serving his main advisor.[1]

Academic Career

Yeon-Koo Che’s research concerns microeconomic theory, with special focus on markets, auctions, contracts and matching, dynamic information acquisition. His research has been supported by nine National Science Foundation grants and several Korean National Science Grants. He is Fellow of Econometric Society (elected 2009)[2] and Fellow of Economic Theory (elected 2014) for the Society of Advancement of Economic Theory.[3] He is a member of Council of Game Theory Society (elected 2017).[4] He has served as editor of Journal of Industrial Economics, associate editor of Econometrica, Journal of Economic Theory, and Games and Economic Behavior. He was the inaugural recipient in 2008 of the R. K. Cho Economics Prize[5], and the KAEA-MK Prize in 2009[6]. He has given numerous Keynote addresses, including the Jacob Marschak Lecture at Australasian Meeting of Econometric Society (2016)[7], Asian Meeting of Econometric Society (2018), and Latin American Meeting of Econometric Society (2018).

Research

He made significant contributions to the theory of market design, particularly in the areas of auction theory, contract theory and matching theory. His early work contributes to the theory of mechanism and auction design: scoring-rule auctions, auctions with budget constraints, collusion-proof mechanism design, research contest, the incomplete contract paradigm for organization theory, and the matching theory in the context of college and school choice. His recent research agenda includes data-driven digital economy and dynamic information acquisition by economic agents. His current research projects explore the implications of data-driven economic decision making and resource allocation for welfare and distributional consequences.

Auction theory and mechanism design

His first work on auction theory comes from his short stint at the Rand Corporation as a consultant. Recognizing that many public-work contracts are awarded by auctions where bidders compete in multiple dimensions of performances aside from transfer payments, he developed a theory of scoring-rule auctions. In a scoring-rule auction, bidders propose multi-attribute bids say quality q and price p, and the auctioneer (procurer) uses a scoring function s(q,p) to evaluate the bid, and awards a contract to the bidder whose proposal scores highest. His paper[8] shows that the optimal outcome can be implemented by a scoring function that deemphasizes quality relative to price to intensify price competition, either under a first-score format where the winning bidder fulfills his bid or under a second-score format where the price for the winning bidder is readjusted to match the highest losing score accounting for the quality-bids differences. Reducing quality competition to increase price competition anticipates the “squashing” of click-through differences in the internet ad auctions. Meanwhile, his second-score format anticipates the practice of adjusting payments based on advertiser’s click-through rates commonly used in the Internet ad auctions. The scoring rule auction served as a framework for studying research contests and corruption in procurement.

He wrote a series of papers with Ian Gale on the role of budget constraints in auctions and auctions design. They show that bidders differing in budgets act fundamentally differently from bidders differing in their valuations of goods, leading to important implications for efficiency and revenue. The well-known revenue equivalence theorem fails for instance according to their Review of Economics Studies paper.[9]

Together with Jinwoo Kim, he conducted a series of research projects on the implications of collusion in organizations, markets and auctions. Collusive bidding is particularly a prevalent and serious problem in procurement auctions. They study the extent to which different auction rules may be susceptible to collusion and ways for auctions to be designed to combat collusion. The features of such auction rules include payments by losing bidders, binding reserve prices, and/or combining negotiation with auctions.

Contract theory

Many key institutions such as property rights, authority, decision rights, and communication channels are difficult to explain in light of Coase theorem: parties can simply bargain to agree on an efficient action and enforce that agreement through a contract. To explain those institutions, one thus need to explain why such a contractual approach is not possible or too costly to work. The incomplete contracts paradigm pioneered by Grossman, Hart and Moore argues that contracts are often incomplete and unable to provide adequate incentives for crucial relationship-specific investments needed for transactions, thus rationalizing organizational intervention such as ownership rights and authority, etc. Yeon-Koo Che’s 1999 paper with Don Hausch[10] provides a rigorous foundation (See Segal and Hart and Moore for alternative foundation) for this paradigm, identifying investment externalities ("cooperativeness") and renegotiability of contracts in the face of mutually beneficial ex post gains as two conditions rationalizing organizational interventions. Meanwhile, his Econometrica paper (2004) with Joszef Sakovics[11] shows that contracts can be more powerful in a dynamic setting and often provide efficient incentives for relationship-specific investments.

Matching theory

His research studied the matching markets particularly in the context of assignment of students to public schools, particularly focusing on the stability and fairness of the assignment outcome as well as the incentives of market participants. His works show a large market size helps to achieve a stable outcome[12] and to resolve tradeoffs between efficiency on one side of the market (e.g., students) and the fairness.[13]

Selected Publication

  • Abdulkadiroğlu, Atila; Che, Yeon-Koo; Pathak, Parag; Roth, Alvin; Tercieux, Olivier (2019). "Efficiency, Justified Envy, and Incentives in Priority-Based Matching". American Economic Review: Insights. Retrieved 2020-06-28.

References

  1. ^ Che, Yeon-Koo. "Curriculum Vitae" (PDF). Yeon-Koo Che. Retrieved 2020-06-28.{{cite web}}: CS1 maint: url-status (link)
  2. ^ "Fellows of the Econometric Society 1950 to 2019 | The Econometric Society". www.econometricsociety.org. Retrieved 2020-06-28.
  3. ^ "Economic Theory Fellows". SAET. Retrieved 2020-06-28.
  4. ^ "Council of the Game Theory Society -". 2017-09-28. Retrieved 2020-06-28.
  5. ^ "제1회 조락교경제학상 최연구 교수". Korea Economic Daily (in Korean). 2008-04-24. Retrieved 2020-06-28.{{cite web}}: CS1 maint: url-status (link)
  6. ^ "Maekyung-KAEA Economist". KAEA. 2020-05-30. Retrieved 2020-06-28.
  7. ^ "Jacob Marschak Lecture | The Econometric Society". www.econometricsociety.org. Retrieved 2020-06-28.
  8. ^ Che, Yeon-Koo (1993). "Design Competition through Multidimensional Auctions". RAND Journal of Economics. 24 (4): 668–680. ISSN 0741-6261.
  9. ^ Che, Yeon-Koo; Gale, Ian (1998). "Standard Auctions with Financially Constrained Bidders". The Review of Economic Studies. 65 (1): 1–21. ISSN 0034-6527.
  10. ^ Che, Yeon-Koo; Hausch, Donald B. (1999). "Cooperative Investments and the Value of Contracting". The American Economic Review. 89 (1): 125–147. ISSN 0002-8282.
  11. ^ Che, Yeon-Koo; Sákovics, József (2004). "A Dynamic Theory of Holdup". Econometrica. 72 (4): 1063–1103. ISSN 0012-9682.
  12. ^ Che, Yeon-Koo; Kim, Jinwoo; Kojima, Fuhito (2019). "Stable Matching in Large Economies". Econometrica. 87 (1): 65–110. doi:10.3982/ecta13547. ISSN 0012-9682.
  13. ^ Che, Yeon-Koo; Tercieux, Olivier (2019-10-01). "Efficiency and Stability in Large Matching Markets". Journal of Political Economy. 127 (5): 2301–2342. doi:10.1086/701791. ISSN 0022-3808.
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