Nick Vikander about his Moscow visit

LID: What was your purpose of visiting HSE (CInSt as a part of HSE)?
Nick: The main purpose of my visit to HSE was to work on a joint research project with Alexei Parakhonyak. In this project, we look at a firm's incentives in a market with consumption externalities, where one consumer's decision to buy makes it more attractive for other consumers to buy as well. For example, a consumer may be more willing to adopt a new technology if he expects others to adopt it as well. He may also be more willing to wait in the queue at a nightclub if he expects that others will join him inside. We look at whether a firm will prefer to serve consumers sequentially or simultaneously in this setting, and to make each consumer's decision to buy visible to other consumers. We show that sequential sales are optimal, precisely because consumers behave differently when they know that they will be observed.

LID: What are your main projects at your home University?

Nick: I am interested more broadly in how consumption externalities can affect a firm's incentives in the marketplace, for example to choose a particular price, capacity or advertising strategy. These externalities may be social in nature, where consumption decisions are influenced by a desire for social status or a desire to imitate others. One project I am currently working on looks at how a firm can use sell-outs to encourage bandwagon behavior, by manipulating consumer beliefs about aggregate demand. Another project looks at how a firm can use broad, non-targeted advertising to encourage conspicuous consumption, by allowing wealthy consumers to signal through their purchases.

LID: What are your impressions on working here at HSE?

Nick: This was my second visit to HSE. I very much enjoyed the chance to see people again, and also to meet others for the first time. The visit was a productive one for our joint project, and also gave me the opportunity to discuss with different people about their research. In particular, it was great to see the promising work being carried out at the Research Laboratory for Institutional Analysis of Economic Reforms (LIA).

LID:  How do you like our city?

Moscow is an enormous city, but one that I found surprisingly easy to navigate. In particular, I can say that the metro system is a real joy. If only we had something this efficient back in my hometown of Montreal! The visit also gave me the chance to sit in a few genuine Moscow traffic games, but even that could not ruin the overall experience.

LID: Do you plan to continue your collaboration with HSE?

Nick: I certainly hope to continue my collaboration with HSE, both on the project described above and on other future work. A related idea we are interested in concerns markets where consumers have private signals about product quality. The issue then is whether a firm may want to restrict capacity, in an attempt to trigger a positive informational cascade.