Contact Information

Department of Economics
Northwestern University
2211 Campus Drive
Evanston, IL 60208

Phone: 8722574311

matteocamboni2021@u.northwestern.edu

Education

Ph.D., Economics, Northwestern University, 2022 (expected)
MA, Economics, Northwestern University, 2020
Msc, Economics, Bocconi University, 2015
BA, Economics, Bocconi University, 2013

Primary Fields of Specialization

Microeconomic Theory, Economics of Organizations

Secondary Fields of Specialization

Political Economics, Economics of Information

Curriculum Vitae

Download Vita (PDF)

Job Market Paper

Monitoring Team Members: Information Waste and the Self-Promotion Trap (joint with Michael Porcellacchia)

We analyze a moral hazard problem where a firm incentivizes a team of complementary workers by designing a robust incentive scheme that relies on individual and team performance measures. While using both measures minimizes information rents, team-performance bonuses expose workers to strategic uncertainty about their colleagues’ effort. We show that the firm typically sacrifices statistically-relevant information to curb strategic uncertainty, compensating some workers solely based on their individual performance. We provide a complete characterization of the optimal incentive scheme, highlighting how the firm discriminates among (possibly homogeneous) workers in terms of total rents, type of contract offered, and monitoring some workers more closely than others. Finally, we use this characterization to study the workers’ incentives to facilitate or hinder the firm’s monitoring. We show that competition for better contracts incentivizes workers to be more transparent, triggering an unraveling result that only benefits the firm, delivering the same payoffs as the firm-preferred equilibrium. That is, the competition gives rise to a self-promotion trap.

Working Papers

A Theory of Political Favoritism and Internal Conflicts (joint with Michael Porcellacchia)

This paper shows how favoritism in government policy naturally arises and shapes conflicts in societies where tax extraction is only constrained by the violence potential of multiple social groups. In equilibrium, the government undermines the subjects’ ability to coordinate against taxation by creating a ranking that grants higher status, thus lower taxes, to stronger groups. Such divide-and-conquer strategy (favoritism), which emerges in the shadow of violence, motivates a novel class of conflicts where resource appropriation/destruction is aimed at climbing the government’s ranking. Moreover, since the strongest group gains the largest support for the rulership, groups fight to become the strongest. Expanding the analysis, we study how political institutions and cross-group identities affect the political equilibrium and internal stability. Finally, we discuss how our predictions shed light on the evidence from both contemporary and historical societies.

Intermediated Monitoring in Signaling Games (draft coming soon)
(extended abstract)

This paper analyses a classical signaling model à la Spence where agents’ efforts are not perfectly observable, and the monitoring structure is endogenous. We focus on the incentives for an intermediary (a school) to provide a finer or coarser monitoring structure. We show that a monopolistic school typically benefits from providing no information, inducing the pooling equilibrium as the unique equilibrium of the game. On the other hand, we show that when multiple schools compete to attract students, they will typically select the monitoring structure preferred by the high types. Furthermore, we show that such optimal monitoring structure frequently pools together higher levels of effort with zero effort. In this way, the intermediary is able to induce an equilibrium in which all low types exert no effort and are pooled with positive probability with the high types who, on the other hand, exert an effort lower than the one required by the classical separating equilibrium. From the agents’ perspective, such equilibrium Pareto dominates the separating equilibrium without being dominated by the pooling equilibrium. Finally, we show that this equilibrium is also consistent with a natural extension of the Intuitive Criterion.

International Power Rankings: Theory and Evidence from International Cooperation (joint with Michael Porcellacchia)

Throughout history, powerful countries have used their coercive resources to obtain favorable policies from other countries (geopolitical rents). This paper proposes and tests a theory of geopolitical competition, studying how geopolitical rents depend on the power of all competing countries. Our theory shows that the equilibrium geopolitical rent obtained by a country is not just determined by its power or relative power, but rather by its Weaker Powers Index (WPI), i.e., the combined share of power held by all weaker competitors. Specializing the theory, we show that when the WPI of a country increases, it should trade more, conclude more economic and military deals, have better diplomatic and political relations, and send more aid. In our empirical analysis, we confirm these predictions using bilateral data on international interactions and trade. Finally, we show that the theory can accurately predict the effect of the rise of China and the collapse of the Soviet Union on the United States and other major powers and shed light on various puzzles of international relations, including the Thucydides Trap.

Under Pressure: Optimal Stopping Problems with Stochastic Deadlines (joint with Theo Durandard) (draft coming soon)
(extended abstract)

We explore the effects of time pressure, in particular of (potentially stochastic) deadlines, on optimal stopping problems. We identify and exploit a general connection between stochastic deadlines and discounting to obtain comparative statics on the timing and quality of the decisions. We apply our results to the classical sequential sampling problem à la Wald. Consistent with a vast body of experimental evidence, we show that slower decision-makers make less accurate decisions when time pressure increases over time. This result extends Fudenberg, Strack, and Strzalecki (2018) analysis to the case where all decision-makers face problems with the same perceived difficulty. On the other hand, we show that the opposite is true when time pressure decreases over time: slower decision-makers are more accurate. Finally, we discuss the possible implications of our results for the effects of competition in markets for innovations.

Work in Progress

Thucydides’ Trap: A Geographic Solution to a Historical Puzzle (joint with Michael Porcellacchia)

Great powers with similar levels of power often fight each other (Thucydides’ Trap). This historical regularity is often used to argue that a war between the United States and China is likely to happen in the near future. We consider a model of geopolitical competition, where foreign powers compete to obtain rents from other countries, and we introduce geography by assuming that every foreign power’s ability to project power in a particular region decays with their geographic distance. This extension enables us to define a foreign power’s sphere of influence as the geographic region where it is the strongest foreign power. Such definition is crucial to understand the critical trade-off determining the incentive to fight. Attacking another foreign power (destroying its resources) affects payoffs via two conflicting channels: a relaxation channel and a status channel. By weakening its rival, we show that the foreign power reduces its own payoff by reducing the rent that it is able to extract from its own sphere of influence (relaxation channel). However, weakening the rival could increase the equilibrium payoff by increasing the foreign power’s sphere of influence (status channel). We show that the probability of war increases when two great powers have similar levels of power (as in Thucydides’ Trap). But we also show that geographic distance mitigates this problem, as it hampers the status channel and accentuates the relaxation channel. This finding can explain why the Rise of Germany was disruptive, whereas the rise of the United States or the Soviet Union was not. Moreover, it suggests that the probability of an all-out war between China and the United States might have been exaggerated.

The Political Determinants of Social Unrest: Theory and Evidence from early modern France” (joint with Michael Porcellacchia and Cédric Chambru)

Teaching

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•  Game theory 380 (undergraduate), Fall 2017,  with Prof. Wolinsky
• Introduction to Microeconomics 202 (undergraduate),  Winter and Spring 2018, with Prof. Hernandez
• Introduction to Microeconomics 202 (undergraduate),  Spring and Fall 2020, with Prof. Schulz
• Microeconomics 310 (undergraduate),  Fall 2020 and Fall 2021, with Prof. Schulz
• Microeconomic Analysis Mecn 430 (MBA), Winter 2019 and Winter 2021, with Prof. Antic and Prof. Egorov

Refereeing

Journal of Economic Theory, American Economic Review.

References

Prof. Jeff Ely (Committee Co-Chair)
Prof. Alessandro Pavan (Committee Co-Chair)
Prof. Bruno Strulovici
Prof Georgy Egorov
Prof Asher Wolinsky