Shannon Liu

Shannon Liu
PhD Student, Economics
PhD Program Office Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305

Shannon Liu

I am a Ph.D. candidate in Economics at Stanford Graduate School of Business. I will be on the job market in the 2017-2018 academic year.

Job Market Paper

In many collective settings, early movers take extra risk or bear extra cost without benefiting more from the success of the cause. An example is the funding of an entrepreneurial venture. One investor may lead while others hold off until some invest before committing. What explains the actions of different agents? If information is revealed over time, why doesn't everyone wait? Additionally, what is the pattern of investment in successfully funded ventures compared to those that fail? A model of collective action with learning is proposed. It provides a rationale for some agents to jump in early while others wait. The implications of the theory on the likelihood of success, the dynamics of actions, and on who moves early or later are borne out using data from Kickstarter, a crowd-funding investment source.

Working Papers

Dynamic Participation In A Bet For Collective Agreement

When a group of individuals combine to form a critical mass, a change that requires collective action can be effected. Individuals must have incentives to act, however, in order for the critical mass to be reached and that is not always the case. A general model of collective action is presented where some arbitrary number K out of N agents must agree to act to change the status quo. Actions are costly and the change affects all N agents. Examples of this setting include public good provisions, political movements, and team production. Despite the free-riding problem and the likelihood that change may never occur, agents are willing to initiate a move or follow early movers if both their private valuations of the change and the estimated probability of its success are high enough. They do this because early actors take into account the impact of their actions on other agents' incentives to participate. Sometimes an insufficient number of agents take early action and the movement peters out, leaving the status quo intact. But in some cases, the collective action takes off and the early actors succeed in creating enough followers. The dynamic pattern of actions is fully characterized.

Work in Progress

The Rational Irrationality of Social Change (Slides Available)

Social change takes place only if a sufficient number of people participate. Agents' payoffs from such a change are often interdependent. Some agents are better informed of the nature of the change, others may learn from the actions of early movers in developing their preference. This paper explores how potential participants’ willingness to coordinate in bringing about the change is affected by public and private information of the expected payoff. Surprisingly, if information is revealed gradually, agents who knowingly prefer the change and initially are most optimistic of its success, will become less confident compared to undecided agents after observing earlier actions of peers. Change may happen prematurely and be socially inefficient. This theory has implications for political revolutions, social movement and elections with public polling data. Experiments are designed to test the theoretical findings.

Pricing Strategy of Crowdfunded Products (Preliminary)

In reward-based crowdfunding, funders are sometimes buyers of a good that is proposed to be created by the entrepreneur at the same time. Often funding is not successful unless a sufficient number of funders contribute. The secondary market incorporates information gained from the crowdfunding stage. For example, a project that was oversubscribed conveys positive information to those who might participate in the secondary market. The demand for the product by those who enter the market later is therefore different from those who enter early because of differences in information. As a result, opportunities for intertemporal price discrimination may exist. The theory is presented and tested using data from Kickstarter, Open Library and Amazon.

Setting Employment Target with Credibility and Distributional Concerns, with Vivienne Groves. (Preliminary)

Many businesses strive to create a more inclusive work environment, with particular attention to gender balance and increasing representation of women and minorities, especially in management positions. Achieving such an objective often involves setting specific gender targets at various levels of the firm’s hierarchy. A theoretical framework designed to provide specific calibrations of minority and gender target within hierarchical organizations is developed. The predictions of the model are tested using data from Wesfarmers, an Australian conglomerate.

When to Accept An Offer, with Edward Lazear. (Very Preliminary)