Doctoral Student

David Hao Zhang

David Zhang is a first year doctoral student at HBS. Prior to graduate school, he worked for two years at the Federal Reserve Bank of Boston and for one year at Legal Economics. He obtained a BA from Amherst College. At the moment, he is particularly interested in industrial organization and financial markets.
David Zhang is a first year doctoral student at HBS. Prior to graduate school, he worked for two years at the Federal Reserve Bank of Boston and for one year at Legal Economics. He obtained a BA from Amherst College. At the moment, he is particularly interested in industrial organization and financial markets.

Journal Articles

  1. Options Compensation as a Commitment Mechanism in Oligopoly Competition

    Jun Ishii and David Hao Zhang

    We analyze how CEO stock options compensation can be used as a commitment device in oligopolistic competition. We develop a two-stage model where shareholders choose managerial compensation to commit their managers to being aggressive in equilibrium. Our results may explain why some shareholders appear to incentivize ‘excessive’ risk taking through stock options compensation. We analyze how our results are impacted by product quality, marginal cost, product differentiation, and industry concentration. As motivation for our research, we show that there exists positive empirical correlation between industry concentration and options compensation vega within a sample of firms, as suggested by our model.

    Keywords: CEO compensation; ceo risk-taking; strategic delegation; Stock Options; Executive Compensation;

    Citation:

    Ishii, Jun, and David Hao Zhang. "Options Compensation as a Commitment Mechanism in Oligopoly Competition."Managerial and Decision Economics (forthcoming). View Details
  2. History-based versus Uniform Pricing in Growing and Declining Markets

    Oz Shy, Rune Stenbacka and David Hao Zhang

    We analyze the Markov Perfect Equilibria of an infinite-horizon overlapping generations model with consumer lock-in to compare the performance of history-based and uniform pricing in growing and declining markets. Under history-based pricing, firms charge higher prices to locked-in customers and lower prices to new customers. We show that a high exit rate of consumers (sufficiently declining market) constitutes a sufficient condition for history-based pricing to generate higher average prices than uniform pricing, thereby harming consumer welfare. In contrast, a high consumer entry rate (sufficiently growing market) ensures that history-based pricing intensifies competition compared with uniform pricing.

    Keywords: history-based pricing; introductory discount; uniform pricing; consumer lock-in; high switching costs; Demand and Consumers; Competition; Price; Market Entry and Exit; Product Marketing;

    Citation:

    Shy, Oz, Rune Stenbacka, and David Hao Zhang. "History-based versus Uniform Pricing in Growing and Declining Markets."International Journal of Industrial Organization 48 (September 2016): 88–117. View Details

Consumer Payments

  1. How Do People Pay Rent?

    David Hao Zhang

    Households still pay rent primarily with paper methods, even though electronic methods are featured more prominently among high-income, high-education, and high-rent households. These patterns may be explained either by the lack of landlord acceptance of electronic methods or by the unwillingness of tenants to pay using these methods.
    The dominant methods for paying rent are cash (22 percent), check (42 percent), and money order (16 percent). Electronic methods are still rarely used, at 8 percent for bank account number payment and 7 percent for online banking bill payment, and less than 2 percent for debit and credit cards.
    Compared with other large bill payments of more than $200, rental payments are much more likely to be made with paper-based methods than with electronic methods, despite the recent attempts by start-ups to make it easier for landlords to accept electronic payments. They are also much less likely to be automatic.
    Check and electronic methods are more frequently used for higher-value transactions and by those with higher income and education.

    Keywords: consumer payments; rent payments; money order; cash; credit card; checks;

    Citation:

    Zhang, David Hao. "How Do People Pay Rent?" Federal Reserve Bank of Boston, Research Data Report, No. 16-2, Federal Reserve Bank of Boston, Boston, MA, 2016. View Details