2024 IIOC Awards Recipients

Distinguished Fellow

Kenneth Hendricks (University of Wisconsin)

Prof. Kenneth Hendricks is Laurits R. Christensen Distinguished Chair in Economics, University of Wisconsin-Madison. Prof. Hendricks's contributions to the field of industrial organization are numerous and deep. He is particularly known for his important work developing and estimating models of bidding behavior in auctions. His work addresses many practical challenges that arise in using auctions as an allocation mechanism such as detecting collusion among auction participants, strategic bidding in common value first price auctions where some bidders have potentially superior information, or joint bidding by auction participants. In addition to his work on auctions, Prof. Hendricks's theoretical and empirical work studies such diverse topics as the demand for music and the role of informational externalities in investment decisions.  His work contributes to our understanding of hub and spoke networks, characterizing markets in which air carriers choose both routes and prices in monopoly and competitive settings.

Prof. Hendricks has taught and mentored many students and junior faculty. His engagement with colleagues has contributed to the lasting industrial organization excellence of each economics department where he has been a faculty member. Anyone who has ever talked to Prof. Hendricks about a research paper knows that the intensity of his attention and advice is unmatched. In addition to his distinguished research record, Professor Hendricks has provided substantial service to the economics profession in general and the Industrial Organization Society in particular, serving as President of the IOS from 2018 to 2019.

Distinguished Service

David Sappington (University of Florida)

Prof. David Sappington is Eminent Scholar at the Department of Economics, University of Florida, and Director of the Robert F. Lanzillotti Public Policy Research Center at the University of Florida.

Prof. Sappington has conducted foundational scholarship in industrial organization, including seminal work on the theory of regulation. He has an exemplary record of service to the U.S., the profession, and the Industrial Organization Society. Prof. Sappington brought his knowledge of regulation to practice as the Chief Economist of the Federal Communications Commission from 2001 to 2002. He has served as the Director of the Robert F. Lanzillotti Public Policy Research Center since 1999. This important Center supports high-quality, independent research that informs public policy.

Prof. Sappington has served the editorial boards of numerous journals in economics and is currently an editorial board member for The Rand Journal of Economics, The Journal of Regulatory Economics, Journal of Economics and Management Strategy, The Review of Industrial Organization, The Review of Network Economics, and Information Economics and Policy. Finally, Prof. Sappington was a member of the Industrial Organization Society board from 2006 to 2020 and led the organization as IOS President from 2008 to 2009.

Lanzillotti Prize

Heski Bar-Isaac (University of Toronto), Justin Johnson (Cornell University), and Volker Nocke (University of Mannheim), for "Acquihiring for Monopsony Power"

Heski Bar-Isaac, Justin Johnson, and Volker Nocke study acquisitions in which startups are acquired for the sole purpose of hiring specialized talent. The authors suppose that when a large firm buys a small firm it has no interest in assets other than the firm's specialized workers. A puzzle in these cases is why the acquiring firm should pay anything to the target firm's shareholders, rather than simply hiring away the specialized workers. They show theoretically that by using acquihiring, the acquiring firm plus the shareholders in the small firm are able to expropriate employees' surplus. This suggests that a common defense of acquihiring -- that it is a hiring tool not meant to affect competition in the product market -- can itself be a means of reducing competition in the labor market. As a consequence, acquihiring may harm employees and be socially inefficient.

Rising Star Prize

Anran Li (Northwestern University), for "Commitment, Competition, and Preventive Care Provision"

Anran Li's paper examines the impact of competition and limited consumer commitment on the coverage of preventative health care by health insurance plans. The paper identifies an important trade-off that stems from competition; competition reduces insurance premiums but also reduces the incentives of insurers to invest in the long-term health of consumers since consumers can move to a different plan in the future. Li develops a dynamic equilibrium model in which insurers choose premiums and preventative care coverage and these choices impact the evolution of consumer health status. The paper demonstrates efficiency losses from fragmented insurance markets due to the loss of investment in preventative care. Li estimates the model using the Utah All Payer Claims Data and explores policy counterfactuals. Her model and estimates imply that the most promising method for addressing under-investment in preventative care is not eliminating competition but, rather, direct quality regulation. The committee believes that the model, methods, and estimates from the paper have wide-ranging implications for health insurance policy as well as other settings in which competition may dull long-run investment incentives. The paper is also timely as it contributes to current policy debates about insurance coverage for expensive drugs that have been found to have dramatic long-run health effects.

Public Utility Prize

Lauri Kytomaa (Cornell University), for "The Roles of Borrower Private Information and Mortgage Relief Design in Foreclosure Prevention"

Lauri Kytomaa's paper illustrates how debt relief design and equilibrium bank behavior contribute to the incidence of residential foreclosures in the US. When banks decide whether to offer debt relief to potentially distressed borrowers, they take into account the costs of processing relief. However, they also consider the fact that borrowers have private information, which incentivizes them to withhold relief in order to deter financially healthy borrowers from pretending to be distressed. Using a model of equilibrium bank behavior, Kytomaa predicts the impact of the Federal Home Affordable Modification Program, which offset banks' costs of relief. He finds that the program increased relief disbursement by banks and decreased foreclosures by 3%, keeping about 200,000 properties out of foreclosure between 2007 and 2016. Despite these successes, however, information frictions still led to about 1.1 million foreclosures and $110 billion of lost value, and the program failed to prevent 86% of foreclosures.

Best Paper by Junior Author

Garrett Senney (Office of the Comptroller of the Currency) and Jonathan Lhost (Lawrence University), for "Big Bids and Bidder Behavior in Uniform Price Auctions: Evidence from Peer-to-Peer Loan Markets"

Senney and Lhost's empirical paper studies the effect of big bids on uniform price auctions. In a uniform price auction such as peer-to-peer lending, the high bidders each win a share of the object being auctioned but pay a price equal to the first losing bid. This structure allows an individual bidder to create localized market power by placing a single "big" bid, which may influence subsequent bidders or deter potential bidders from entering the auction. Using detailed bid data in a large peer-to-peer loan market, this paper shows that auctions with a big bid receive fewer bids overall, but these loan requests are still more likely to get funded and to have higher interest rates. Further analysis suggests that this is not driven by subsequent bidders reacting to the identity of the big bidder or learning private information from the big bids. Rather, they respond to the bigness of the bid itself and play a mixed strategy of strategic herding. In particular, because some bidders avoid the listing with a big bid, the reduced intra-auction competition leads to less downward price pressure, and therefore lenders who enter can rationally bid higher interest rates. This interesting finding suggests that big bids can affect the revenue and efficiency of uniform price auctions. The prize committee believes that the results of this paper have important implications for the optimal design of such auctions.