Nour's Research

Returns when Product Inspection is a Choice

This paper examines a seller's profit maximizing return policy in a setting where consumers can inspect a product before purchasing and return it if it fails to meet their expectations. The model incorporates (1) heterogeneity in customers' taste preferences, (2) uncertainty about product valuation prior to purchase, and (3) the costs associated with inspection. My result suggests that all these three factors interact in the optimal solution: the buyer's option to costly inspect the product compels the seller to offer a strictly positive return that changes with the degree of heterogeneity among the buyers. On the seller side, I show that the seller has a strict preference over the buyers' inspection behavior. Furthermore, I also show that there exists a nontrivial region of parameter values for which the outcomes of the optimal menu weakly improve the outcome of the seller and the buyers as the inspection cost increases.

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Signaling with Evidence

with Marco Escobar

We study the strategic interaction between a developer and an investor, where the developer requires funding to complete a project, and the investor provides the necessary capital. Both parties have aligned interests in completing the project, but the investor bears the ongoing costs of development. Importantly, the extent of the project's progress in each period is private information of the developer, and the distribution of advancements may evolve over time. A key assumption in our model captures a common feature of certain projects: partial progress can be demonstrated before full completion. Specifically, while the developer can always show less progress than what has actually been made, they can never show more. We demonstrate that this assumption leads to a unique class of equilibria, in which the developer reveals only the minimum advancement necessary to secure continued funding in each period, effectively saving work as a form of insurance for future periods.
Despite the presence of asymmetric information and the developer's ability to withhold progress, this one-sided restriction is sufficient to ensure that projects can be initiated and completed with a positive probability. In contrast, if the investor were unable to monitor partial development or if the developer could misrepresent progress in any direction, the project might not start at all.

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