Research

Research Interests

I am a microeconomic theorist who studies peoples' behavior in dynamic situations. I am especially interested in the role of stochastically evolving private information. I studied the role of private learning in dynamic contests, strategic experimentation games, and dynamic mechanism design settings. The techniques used are drawn from game theory, optimization and probability theory. If necessary, I develop new techniques and mathematical results.

Applications of my work include revenue maximizing sale of airplane tickets, dynamic ad-word auctions, optimal unemployment benefits, model-free option pricing and competition between mutuals fund managers.

View a long research statement here.

Publications, Working Paper & Work in Progress

More information, citations, etc can be found on my Google Scholar page and my SSRN Author page.
  1. The Wald Problem and the Equivalence of Sequential Sampling and Static Information Costs

    Stephen Morris, Philipp Strack

    Working Paper on SSRN
  2. Turning Up the Heat: The Demoralizing Effect of Competition in Contests

    Dawei Fang, Thomas Noe, Philipp Strack

    Working Paper on SSRN

  3. A Flow Approach to Dynamic Mechanism Design

    Thomas Kruse, Philipp Strack

  4. Repeated Sales with Unobservable Arrival

    Dirk Bergemann, Philipp Strack

  5. Never, Ever Getting Started: On Prospect Theory without Commitment

    Sebastian Ebert, Philipp Strack

    Working Paper on SSRN

  6. A Direct Test for Regret Aversion in Dynamic Contexts

    Paul Viefers, Philipp Strack

  7. Learning with Informational Externalities

    Eduardo Faingold, Olivier Gossner, Philipp Strack

  8. Groupthink and the Failure of Information Aggregation in Large Groups

    Matan Harel, Elchanan Mossel, Philipp Strack, Omer Tamuz

    Working Paper on SSRN - Working Paper on arxiv

  9. Efficient Dynamic Allocation with Strategic Arrivals

    Alex Gershkov, Benny Moldovanu, Philipp Strack

    Working Paper

  10. Risk-Taking in Contests - The impact of fund-manager Compensation on Investor Welfare

    Philipp Strack

    Working Paper on SSRN

  11. An Inverse Optimal Stopping Problem for Diffusions

    Revise and Resubmit in Mathematics of Operations Research

    Thomas Kruse, Philipp Strack

    Working Paper on SSRN - Working Paper on arxiv

  12. Expectation-Based Loss Aversion and Strategic Interaction

    Accepted in Games and Economic Behavior

    Simon Dato, Andreas Grunewald, Daniel Mueller, Philipp Strack

    Working Paper on SSRN

  13. Unrealistic Expectations and Misguided Learning

    Conditionally Accepted in Econometrica

    Paul Heidhues, Botond Köszegi, Philipp Strack

    Working Paper on SSRN

  14. Stochastic Choice and Optimal Stopping

    Conditionally Accepted in American Economic Review

    Drew Fudenberg, Philipp Strack, Tomasz Strzalecki

    Working Paper on SSRN

  15. Too Proud to Stop: Regret in Dynamic Decisions

    Revise and Resubmit in Journal of the European Economic Association

    Paul Viefers, Philipp Strack

    Working Paper on SSRN - Post on the blog of the 5th Lindau Nobel Laureate Meeting - Blogpost on voxeu.org

  16. Active learning with a misspecified prior

    Forthcoming in Theoretical Economics, 2017

    Drew Fudenberg, Gleb Romanyuk, Philipp Strack

    Published Paper - Working Paper on SSRN

  17. Revenue Maximizing Mechanisms with Strategic Customers and Unknown, Markovian Demand

    Accepted in Management Science, November 2016

    Alex Gershkov, Benny Moldovanu, Philipp Strack

    Working Paper on SSRN

  18. Continuous Time Contests with Private Information

    Mathematics of Operations Research, August 2016

    Christian Seel, Philipp Strack

    Published Paper - Working Paper on SSRN

  19. Strategic Experimentation with Private Payoffs

    Journal of Economic Theory, September 2015

    Paul Heidhues, Sven Rady, Philipp Strack

    Published Paper - Working Paper on SSRN

  20. Dynamic Revenue Maximization: A Continuous Time Approach

    Journal of Economic Theory, September 2015

    Dirk Bergemann, Philipp Strack

    Published Paper - Working Paper on SSRN

  21. Optimal Stopping With Private Information

    Journal of Economic Theory, September 2015

    Thomas Kruse, Philipp Strack

    Published Paper - Working Paper on SSRN

  22. Randomization beats Second Price as a Prior-Independent Auction

    Economics and Computation, June 2015

    Hu Fu, Nicole Immorlica, Brendan Lucier, Philipp Strack

    Working Paper on arxiv

  23. Finite, integrable and bounded time embeddings for diffusions

    Bernoulli, May 2015

    Stefan Ankirchner, David Hobson, Philipp Strack

    Published Paper - Working Paper on arxiv

  24. Until the Bitter End: On Prospect Theory in the Dynamic Context

    American Economic Review, April 2015

    Sebastian Ebert, Philipp Strack

    Published Paper - Working Paper on SSRN - A discussion by Kevin Bryan - Winner of the 2013 SCOR/EGRIE Award

  25. Deadlines in Stochastic Contests

    Journal of Mathematical Economics, May 2014

    Christian Seel, Matthias Lang, Philipp Strack

    Published Paper - Working Paper on SSRN

  26. Gambling in Contests

    Journal of Economic Theory, September 2013

    Christian Seel, Philipp Strack

    Published Paper - Working Paper on SSRN

  27. Skorokhod Embeddings in Bounded Time

    Stochastics And Dynamics, September 2011

    Stefan Ankirchner, Philipp Strack

    Published Paper - Working Paper

Presentations

Presentations by me or a coauthor

Apr 26 2017
University of California San Diego
Unrealistic Expectations and Misguided Learning presented by Philipp Strack
Apr 10 2017
Arizon State University
On the Speed of Social Learning presented by Philipp Strack
Dec 1 2016
Princeton
On the Speed of Social Learning presented by Philipp Strack
Nov 29 2016
Princeton
Unrealistic Expectations and Misguided Learning presented by Philipp Strack
Nov 21 2016
Columbia University
Unrealistic Expectations and Misguided Learning presented by Philipp Strack
Nov 7 2016
Duke University
On the Speed of Social Learning presented by Philipp Strack
Apr 29 2016
Oxford
Risk-Taking in Contests - The impact of fund-manager Compensation on Investor Welfare presented by Philipp Strack
Apr 27 2016
Warwick
Risk-Taking in Contests - The impact of fund-manager Compensation on Investor Welfare presented by Philipp Strack
Apr 26 2016
University College London
Risk-Taking in Contests - The impact of fund-manager Compensation on Investor Welfare presented by Philipp Strack
Apr 25 2016
University of Surrey
Risk-Taking in Contests - The impact of fund-manager Compensation on Investor Welfare presented by Philipp Strack
Apr 20 2016
Northwestern University
Risk-Taking in Contests - The impact of fund-manager Compensation on Investor Welfare presented by Philipp Strack
Jan 23 2016
Washington University St. Louis
Competition and Endogenous Risk-Taking in Financial Markets presented by Philipp Strack
Nov 17 2015
University of Chicago
On the Speed of Social Learning presented by Philipp Strack
Oct 26 2015
USC
On the Speed of Social Learning presented by Philipp Strack
Oct 26 2015
Stanford
Competition and Endogenous Risk-Taking in Financial Markets presented by Philipp Strack
Oct 16 2015
Simons Center Berkeley
On the Speed of Social Learning presented by Philipp Strack
Oct 1 2015
Penn State
On the Speed of Social Learning presented by Philipp Strack
Sep 17 2015
University of Pittsburgh
On the Speed of Social Learning presented by Philipp Strack
Sep 15 2015
UPenn
On the Speed of Social Learning presented by Philipp Strack
Jul 15 2015
University of Bonn
On the Speed of Social Learning presented by Philipp Strack
Jun 9 2015
University of Jena
On the Speed of Social Learning presented by Philipp Strack
Apr 8 2015
Stanford
Too Proud to Stop: Regret in Dynamic Decisions presented by Philipp Strack
Mar 27 2015
University of Michigan
Too Proud to Stop: Regret in Dynamic Decisions presented by Philipp Strack
Mar 4 2015
Santa Clara University
Too Proud to Stop: Regret in Dynamic Decisions presented by Philipp Strack
Jan 2015
AEA Meeting Boston
Until the Bitter End: On Prospect Theory in the Dynamic Context presented by Sebastian Ebert
Jan 3 2015
AEA Meeting Boston
Optimal Stopping with Private Information presented by Philipp Strack
Nov 18 2014
University of Montreal
On the Speed of Social Learning presented by Philipp Strack
Nov 9 2014
INFORMS Annual Meeting 2014, San Francisco
Revenue Maximizing Mechanisms with Strategic Customers and Unknown Demand: Name-Your-Own-Price presented by Philipp Strack
Oct 7 2014
UC Davis
Too Proud to Stop: Regret in Dynamic Decisions presented by Philipp Strack
Sep 30 2014
Berkeley Psych and Econ
Too Proud to Stop: Regret in Dynamic Decisions presented by Philipp Strack
Sep 4 2014
Berkeley Risk Seminar
Competition and Endogenous Risk-Taking in Financial Markets presented by Philipp Strack
Sep 4 2014
Harvard/MIT Theory Seminar
Stochastic Choice and Optimal Sampling presented by Philipp Strack
Sep 4 2014
Chicago
Stochastic Choice and Optimal Sampling presented by Tomasz Strzalecki
May 11 2014
SITE Meeting 2014, Stanford
Unrealistic Expectations and Misguided Learning presented by Botond Koszegi
May 10 2014
SITE Meeting 2014, Stanford
Stochastic Choice and Optimal Sampling presented by Philipp Strack
May 10 2014
POMS Conference, Altlanta
Dynamic Allocation and Learning with Strategic Arrivals presented by Philipp Strack
Apr 14 2014
MIT Sloan Operations Management Seminar
Dynamic Allocation and Learning with Strategic Arrivals presented by Philipp Strack
Feb 12 2014
Ludwig Maximilians University Munich, Germany
Too Proud to Stop: Regret in Dynamic Decisions presented by Paul Viefers
Jan 17 2014
University Laval, Montreal Canada
Too Proud to Stop: Regret in Dynamic Decisions presented by Paul Viefers
Dez 12 2013
University of Bonn
Risktaking and Financial Competition presented by Philipp Strack
12/04/13
Yale University
Risktaking and Financial Competition presented by Philipp Strack
Nov 11 2013
University of Montreal
Risktaking and Financial Competition presented by Philipp Strack
Oct 23 2013
Max Planck Institute, Bonn
Risktaking and Financial Competition presented by Philipp Strack
Sep 24 2013
University of Pennsylvania, Philadelphia
Optimal Stopping with Private Information presented by Philipp Strack
Sep 23 2013
Duke University
Optimal Stopping with Private Information presented by Philipp Strack
Sep 17 2013
University of Toronto, Toronto
Optimal Stopping with Private Information presented by Philipp Strack
Sep 15 2013
University of Texas, Austin
Optimal Stopping with Private Information presented by Philipp Strack
Aug 29 2013
Microsoft Research New England, Boston
Dynamic Revenue Maximization: A Continuous Time Approach presented by Philipp Strack
Aug 23 2013
MIT Applied Theory Summer Camp
Optimal Stopping with Private Information presented by Philipp Strack
Aug 16 2013
Microsoft Research New England, Boston
Optimal Stopping with Private Information presented by Philipp Strack
Apr 25 2013
University of Warwick, Statistics Departement
Optimal Stopping with Private Information presented by Philipp Strack
Apr 9 2013
University of Bielefeld, Germany
Optimal Stopping with Private Information presented by Philipp Strack
Feb 11 2013
Northwestern University, Evanston
Optimal Stopping with Private Information presented by Philipp Strack
Feb 7 2013
University of California, Los Angeles
Optimal Stopping with Private Information presented by Philipp Strack
Feb 5 2013
Columbia University,Business School
Optimal Stopping with Private Information presented by Philipp Strack
Feb 4 2013
Columbia University, Economics Department
Optimal Stopping with Private Information presented by Philipp Strack
Feb 1 2013
University of California, Berkeley
Optimal Stopping with Private Information presented by Philipp Strack
Jan 30 2013
New York University
Optimal Stopping with Private Information presented by Philipp Strack
Jan 24 2013
California Institute of Technology
Optimal Stopping with Private Information presented by Philipp Strack
Jan 18 2013
Harvard University
Optimal Stopping with Private Information presented by Philipp Strack
Jan 16 2013
University College London
Optimal Stopping with Private Information presented by Philipp Strack
Jan 15 2013
University of Warwick
Optimal Stopping with Private Information presented by Philipp Strack
Dez 3 2012
University of Chicago
Dynamic Revenue Maximization a Continuous Time Approach presented by Dirk Bergemann
Nov 9 2012
European Winter Meetings of the Econometric Society 2012, Konstanz
Continuous Time Contests presented by Philipp Strack
Oct 29 2012
University of Cologne
Until the Bitter End: On Prospect Theory in the Dynamic Context presented by Philipp Strack
Oct 16 2012
INFORMS Annual Meeting 2012, Phoenix
Dynamic Revenue Maximization a Continuous Time Approach presented by Philipp Strack
Oct 9 2012
Yale University
Dynamic Implementability for Optimal Stopping presented by Philipp Strack
Oct 4 2012
University of Maastricht
Dynamic Implementability for Optimal Stopping presented by Philipp Strack
Aug 2012
27th Annual Congress of the European Economic Association Malaga
Until the Bitter End: On Prospect Theory in the Dynamic Context presented by Philipp Strack
Jun 20 2012
Fourth Congress of the Game Theory Society 2012 Istanbul
Continuous Time Contests presented by Philipp Strack
May 23 2012
Maastricht University
Continuous Time Contests presented by Christian Seel
Apr 20 2012
Mannheim University
Strategic Experimentation with Private Payoffs presented by Philipp Strack
Feb 10 2012
Berlin Behavioral Economics Workshop
Until the Bitter End: On Prospect Theory in the Dynamic Context presented by Philipp Strack
Feb 2 2012
Finance Seminar, University of Bonn
Until the Bitter End: On Prospect Theory in the Dynamic Context presented by Sebastian Ebert
Jan 11 2012
University of Bonn
How to Sell an Option presented by Philipp Strack
Sep 9 2011
Mannheim University
Continuous Time Contests presented by Christian Seel
Sep 6 2011
Verein fuer Sozialpolitik, Jahrestagung 2011
Gambling in Contests presented by Christian Seel
July 19 2011
Stochastic and Real World Models Conference 2011 (Bielefeld)
Skorokhod Embeddings in Bounded Time presented by Stefan Ankirchner
July 12 2011
International Conference on Game Theory, Stony Brook University New York
Continuous Time Contests presented by Philipp Strack
June 2011
Philipps-University Marburg
Skorokhod Embeddings in Bounded Time presented by Stefan Ankirchner
April 27 2011
Yale University
Continuous Time Contests presented by Philipp Strack
Feb 24 2011
IMPACT-Workshop, Berlin University
Skorokhod Embeddings in Bounded Time presented by Stefan Ankirchner
Feb 15 2011
Yale University
Gambling in Contests presented by Philipp Strack
Feb 2 2011
Maastricht University
Gambling in Contests presented by Christian Seel
Jan 7 2011
AEA Meeting Denver
Strategic Experimentation with Private Payoffs presented by Paul Heidhues
Nov 2010
Brownbag Seminar, University of Cologne
Gambling in Dynamic Contests presented by Christian Seel
Oct 28 2010
Brownbag Seminar, University of Frankfurt
Continuous Time Contests presented by Christian Seel
Oct 20 2010
SFB Conference, University of Bonn
Strategic Experimentation with Private Payoffs presented by Sven Rady
Oct 10 2010
University of Jena
Skorokhod Embeddings in Bounded Time presented by Stefan Ankirchner
Sep 11 2010
Workshop on Stochastic Games, Erice
Gambling in Dynamic Contests presented by Christian Seel
Aug 17 2010
World Congress of the Econometric Society 2010, Shanghai
Gambling in Dynamic Contests presented by Philipp Strack
May 11 2010
Mathematics Department University of Bonn
Gambling in Dynamic Contests presented by Philipp Strack
Apr 21 2010
Economics Department University of Bonn (Microworkshop)
Continuous Time Contests presented by Christian Seel
Apr 1 2010
Yale University
Strategic Experimentation with Private Payoffs presented by Sven Rady
Mar 15 2010
University of California, Berkeley
Strategic Experimentation with Private Payoffs presented by Paul Heidhues
Mar 19 2010
Economics Department University of Barcelona (EDP Jamboree 2010)
Gambling in Dynamic Contests presented by Christian Seel
Dez 1 2009
Economics Department University of Bielefeld
Gambling in Dynamic Contests presented by Christian Seel
Jul 8 2009
Economics Department University of Bonn (Microworkshop)
Gambling in Dynamic Contests presented by Philipp Strack

Research Statement

Download my research statement as PDF file

Research Statement: Philipp Strack

I am a microeconomic theorist interested in how people behave and interact in dynamic situations. My research explores questions of mechanism design, learning, dynamic non-expected utility models and contests.

Learning and the Timing of Decisions: Consider a customer who chooses between two products. Is she more likely to pick the product which maximizes her utility when she chooses quickly? Fudenberg, Strack & Strzalecki (2016) study the correlation between the timing of decisions and their likelihood of being correct. We find that in a sequential sampling model (Wald, 1947), where the difference between the utilities of the choices is ex-ante unknown, quick choices are on average more likely to be correct. This provides an explanation for the common empirical finding that quick decisions tend to be better in experiments (cf. Swensson, 1972; Luce, 1986; Ratcliff & McKoon, 2008).

Learning under Misspecification: How do economic agents with misspecified beliefs learn? Consider, for example, an agent who is overconfident about her own ability and observes the output of her team. As she overestimates her own productivity, she will be disappointed by the team's output and thus tend to think that her team mates are of lower ability than they truly are. Heidhues, Koszegi & Strack (2016) show that this miss-inference caused by the agent's overconfidence is self-reinforcing and drives her beliefs systematically away from the truth. The ability to learn consequently harms overconfident agents as learning leads them to worse decisions. In Fudenberg, Romanyuk & Strack (2016), we characterize long-run beliefs and actions for general misspecified beliefs under a Binomial prior.

Social Learning: Economic agents often do not only learn from their own experience. A customer could learn about the quality of a product by observing other customers' choices. In Harel, Mossel, Strack & Tamuz (2016), we explore how rational agents learn from the actions of others who face similar decision problems. We show that only a small fraction of the original private information can be learned from actions. This result implies that decentralized information aggregation with rational agents will fail in many contexts and provides a justification for institutions that aggregate information. Heidhues, Rady & Strack (2015) show that communication through cheap talk messages can sometimes incentivize efficient information acquisition and transmission.

Mechanism Design: Many contracts - like phone contracts, gym memberships, repeated procurement auctions - govern long-term relationships. The recent literature in dynamic mechanism design studies how to structure such long-term contracts in order to maximize a given objective like social welfare or revenue. In Kruse & Strack (2015, 2016a), we derive optimal contracts for irreversible investment and general optimal stopping problems. In Bergemann & Strack (2015, 2016), we explore optimal contracts for repeated sales and procurement situations. Gershkov, Moldovanu & Strack (2016) derive a revenue maximizing sales mechanism when buyers arrive stochastically and time their purchase strategically. In Strack & Kruse (2016b), we want to analyze under what circumstances local incentive compatibility conditions imply global incentive compatibility in dynamic mechanism design problems. Fu, Immorlica, Lucier & Strack (2015) consider the optimal design of a static auction when the designer does not know the distributions of the bidders' valuations and takes a worst case approach.

Dynamic Behavioral Models: While expected utility (EU) is well understood in a static as well as in a dynamic context, a lot of research on non-EU preferences has focused on static contexts. Ebert & Strack (2015) consider an extension of prospect theory (PT) to the dynamic context. We find that a naive PT decision maker without commitment will never stop gambling, which predicts that she will always go bankrupt in a casino and never sell a stock even if it is profitable to do so immediately. In contrast, Ebert & Strack (2016) show that a sophisticated PT decision maker without commitment will never start gambling, i.e. will behave like an infinitely risk-averse EU agent. Viefers & Strack (2016a,b) explore anticipated regret (Lomes & Sugden, 1982) in a dynamic model both analytically and experimentally. We find that subjects are reluctant to accept an offer below the best past offer and show that this is consistent with the minimization of anticipated regret.

Contests: Many economic situations take the form of a contest. As fund managers' compensation mainly depends on their relative performance, they should behave as if they were competing in a contest. Strack (2016) studies the competition between fund managers in a dynamic financial market model à la Black Scholes. The paper proves that in equilibrium, fund managers use inefficiently risky investment strategies. The more competitive the managed fund market becomes, the larger the resulting welfare loss. As in 2013, 46.3% of US households held investments into managed funds valued at 17.1 trillion US dollars, this excessive risk-taking is clearly relevant for social welfare. Seel & Strack (2013, 2015) develop a novel continuous time contest model where contestants learn about their own performance over time, but not about their competitors' performance, and can dynamically decide when to stop exerting effort. Lang, Seel and Strack (2014) study the role of deadlines in such a dynamic contest model.

Teaching

Fall 2017

ECON 459 -- Behavioral Mechanisms

I am visiting Yale in the Fall 2017 and will be teaching the class ECON 459 on "Behavioral Mechanism Design and Institutions". All information about the class is available on Yale canvas: https://yale.instructure.com/courses/32048

Spring 2017

C103 -- Introduction to Mathematical Economics, Mechanism Design

ECON 206 -- Mechanism Design & Agency Theory

All information about the class can be found on its bcourses page.

Curriculum Vitae

Click here to download a longer CV as a PDF file

Positions

Jul. 2014 - present
UC Berkeley, Berkeley, USA
Assistant Professor
Jul. 2013 - Jul. 2014
Microsoft Research New England, Boston, USA
Postdoctoral Researcher

Education

2011 - present
Bonn International Graduate School of Mathematics (BIGS), Bonn, Germany
Ph.D student in Mathematics supervised by Professor Stefan Ankirchner
2008 - 2013
Bonn Graduate School of Economics (BGSE), Bonn, Germany
Ph.D. in Economics supervised by Professor Paul Heidhues
2004 - 2010
University of Bonn, Bonn, Germany
Diplom in Mathematics
2004 - 2009
University of Bonn, Bonn, Germany
Diplom in Economics

Referee for

Econometrica,   American Economic Review,   Review of Economic Studies,   Journal of Economic Theory,   Theoretical Economics,   International Economic Review,   Journal of the European Economic Association,   American Economic Journal: Microeconomics,   Economic Inquiry,   Review of Labour Economics and Industrial Relations,   Operations Research,   Journal of Mathematical Economics,   Games and Economic Behaviour,   Economics and Computation

Honors

2013
"Until the Bitter End: On Prospect Theory in the Dynamic Context" wins the SCOR/EGRIE Award
2012
Scholarship of the German Federal Bank (Stipendiat der Dt. Bundesbank) 2012
2012
Recipient of the first JEEA Excellence in Refereeing Award 2012
2012
Invited to the European Winter Meetings of the Econometric Society 2012
2008-2012
Scholarship of the Bonn Graduate School of Economics
2008-2011
PhD Scholarship of the Foundation of German Business (Stiftung der Deutschen Wirtschaft)
2008
Scholarship of the Nippon Carl Duisberg Foundation financing a stay at the Takushoku University
2004-2008
Scholarship of the Foundation of German Business (Stiftung der Deutschen Wirtschaft)
2002-2004
FFF (FoerdernFordernForschen) scholarship for highly gifted scholars from the University of Bonn