Thomas  Brzustowski

Thomas Brzustowski

PhD Candidate in Economics

Department of Economics

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English, French
Key Expertise
Economic Theory

About me

Thomas is a PhD job market candidate in the Department of Economics, working in economic theory.


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Encouraging a Go-Getter

We study the problem of motivating effort through information disclosure to an agent whose performance is evaluated in relation to a random threshold. The content of the messages optimally sent by a principal critically depends on the amount of tolerance to risk specified in her objective. Yet, in any case, she induces ex-post efficient actions while keeping the agent ex-ante indifferent between receiving information or not. We derive sufficient conditions for optimality and present explicit solutions when the objective is concave or convex in the cost incurred by the agent. The mapping from state realisations to induced actions is typically random, distributed on an interval and features interesting non-monotonicities (in the first-order stochastic sense). The analysis sheds light on optimal persuasion schemes when actions and states live in a continuum.

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Publications and additional papers

Working papers

Smart Contracts and the Coase Conjecture (with Alkis Georgiadis-Harris and Balazs Szentes), 2022
This paper reconsiders the problem of a durable-good monopolist who cannot make intertemporal commitments. The buyer’s valuation is binary and his private information. The seller has access to dynamic contracts and, in each period, decides whether to deploy the previous period’s contract or to replace it with a new one. The main result of the paper is that the Coase Conjecture fails: the monopolist’s payoff is bounded away from the low valuation irrespective of the discount factor.

Economic Growth in a Cooperative Economy (with Francesco Caselli), 2021
We develop and formalize an equilibrium concept for a dynamic economy in which production takes place in worker cooperatives. The concept rules out allocations of workers to cooperatives in which a worker in one cooperative could move to a different cooperative and make both herself and the existing workers in the receiving cooperative better off. It also rules out allocations in which workers in a cooperative would be made better off by some of the other workers leaving. We also provide a minimum-information equilibrium-selection criterion which operationalizes our equilibrium concept. We illustrate the application of our concept and operationalization in the context of an overlapping-generation economy with specific preferences and technology. The cooperative economy follows a dynamic path qualitatively similar to the path followed by a capitalist economy, featuring gradual convergence to a steady state with constant output. However the cooperative economy features a static inefficiency, in that, for a given aggregate capital stock, firm size is smaller than what a social planner would choose. On the other hand, the cooperative economy cannot be dynamically inefficient, and could accumulate capital at a rate that is higher or lower than the capitalist economy. As a result, steady-state income per worker could be higher or lower in the cooperative economy. We also present an illustrative calibration which quantitatively compares steady-state incomes and welfare in a cooperative and in a capitalist economy.

Disentangling Goods, Labor, and Credit Market Frictions in Three European Economies(Nicolas Petrosky-Nadeau and Etienne Wasmer), Labour Economics, 50: 180-196, 2018.
We build a flexible model with search frictions in three markets: credit, labor, and goods markets. We then apply this model (called CLG) to three different economies: a flexible, finance-driven economy (the UK), an economy with wage moderation (Germany), and an economy with structural rigidities (Spain). In these three countries, goods and credit market frictions play a dominant role in entry costs and account for 75% to 85% of the total entry costs. In the goods market, adverse supply shocks are amplified through their propagation to the demand side, as they also imply income losses for consumers. This adds up to, at most, an additional 15% to 25% to the impact of the shocks. Finally, the speed of matching in the goods market and the credit market accounts for a small fraction of unemployment: most variation in unemployment comes from the speed of matching in the labor market.



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Office Address
Department of Economics
London School of Economics and Political Science
Houghton Street, London WC2A 2AE