Terry Tam

PhD Job Market Candidate

My primary research interests lie in the field of Microeconomic Theory, with a specific focus on mechanism design problems with liars and lie-detection.

My job market paper studies how lie-detecting technology can be applied to deter lying and elicit information from potential liars. I also characterize the optimal lie-detecting design.

I am expecting to graduate in the summer of 2020, and will be available for interviews at the CEEE meeting (Toronto, December 2019), the CICE meeting (Beijing, December 2019) and the AEA/ASSA meeting (San Diego, January 2020).


Abstract: This paper analyzes strategic interactions between lying and lie-detection, and studies the optimal design for costly lie-detection and its effectiveness. An informed sender wants to persuade an uninformed receiver to take high actions but the receiver wants to match the action with the true state. The sender makes a claim about the true state and the receiver decides whether to incur a cost to inspect the truthfulness of the claim. I show that lie-detection technology is useful in improving the receiver's welfare if and only if the cost of lie-detection is sufficiently low and prior expectation of the state is not too high. The receiver-optimal design of admissible claims leads to an equilibrium with three intervals in the state space, where types in the top interval are induced to make precise and truthful claims about the state, which are falsely made by types in the bottom interval and randomly inspected, while types in the middle interval make a truthful but vague claim that is never inspected. Compared to state verification, lie-detection is shown to be more beneficial to the sender because it provides incentives for high types to be truthful. This suggests that fact-checking of politicians' claims is effective in holding them countable and deterring them from lying. [GO TO PAPER]


Abstract: This paper studies optimal screening problem in which an agent incurs a fixed cost of lying when she misrepresents her private information. In this environment, local incentive constraints are not binding in the optimal mechanism, and standard techniques for solving screening problems are not applicable. Significantly, the problem can no longer be dichotomized into two parts solved sequentially: an implementability part which involves an envelope condition and the monotonicity of the allocation, and an optimization part. We develop a new methodology to tackle this problem, characterize the optimal mechanism and compute it in special cases. Our method involves a procedure that jointly solves for the binding non-local incentive constraints and the optimal allocation. The optimal mechanism has a number of novel qualitative properties, such as lack of exclusion and first-best efficient allocation at high- and low- ends of the spectrum of types. Also, bunching never occurs, as the optimal quantity allocation is always increasing in type irrespectively of type distribution.[GO TO PAPER]

Teaching Assistant Positions

2015-16,18-19 Microeconomics Theory (PhD Level)

2017 Intermediate Microeconomics

2012 Game Theory

2011 Economics of Capital Market

2010 Principle of Accounting