Nicolas Melissas


Welcome to my homepage. I finished my PhD in March 2000 at the Universite Libre de Bruxelles under the supervision of Prof. Mathias Dewatripont. After a post-doctoral stay in Barcelona, I took up a job as lecturer at the University of Leicester (UK). Since 2006 I work in ITAM, Mexico-city.

Curriculum Vitae

Published Papers

1.    Herd Behaviour as an Incentive Scheme, Economic Theory, 26 (3), October 2005, pp. 517 - 536


We introduce herding in a model subject to public-good problems. We show how herding, by reducing free-rider problems, may increase efficiency.

2.    Informational Cascades Elicit Private Information, (Joint with Olivier Gossner) International Economic Review, 47 (1), February 2006, pp. 297 - 325


We introduce cheap talk in a dynamic investment model with information externalities. We first show how social learning adversely affects the credibility of cheap talk messages. Next, we show how an informational cascade makes truthtelling incentive compatible. A separating equilibrium only exists for high surplus projects. Both an investment subsidy and an investment tax can increase welfare. The more precise the sender's information, the higher her incentives to truthfully reveal her private information.

3.    Equilibria in a Dynamic Global Game: The Role of Cohort Effects, (Joint with Paul Heidhues) Economic Theory, 28 (3), August 2006, pp. 531 - 557


We introduce strategic waiting in a global game setting with irreversible investment. Players can wait in order to make a better informed decision. We allow for cohort effects and discuss when they arise endogenously in technology adoption problems with positive contemporaneous network effects. Formally, cohort effects lead to intra-period network effects being greater than inter-period network effects. Depending on the nature of the cohort effects, the dynamic game may or may not satisfy dynamic increasing differences. If it does, our model has a unique rationalizable outcome. Otherwise, there exist parameter values for which multiple equilibria arise because players have a strong incentive to invest at the same point in time others do.

4a.    Corruption, Extortion, and the Boundaries of the Law: The One-Monitor Case, (Joint with Svetlana Andrianova) September 2006

4b.    Corruption, Extortion and the Boundaries of the Law, (Joint with Svetlana Andrianova), Journal of Law, Economics & Organization, 25 (2), October 2009, pp. 442-471


In both papers we consider a set-up in which a principal must decide whether or not to legalise a socially undesirable activity. The law is enforced by a monitor who may be bribed to conceal evidence of the offense and who may also engage in extortionary practices. In the latter paper we analyse a two-monitor set-up (the second monitor is honest and monitors the first one) with bounded punishments. In the former paper we analyse a one-monitor set-up with unbounded punishments and we also look at the case in which the monitor needs the consent (and the active participation) of the agent to create fake evidence of wrongdoing (this case is not present in our two-monitor set-up). Our most interesting results are summarised in the latter paper. In particular, we show that: (i) the principal may legalise the activity even if it is a very harmful one, (ii) the principal may declare the activity illegal knowing that the monitor will abuse the law to extract bribes out of innocent people, and (iii) our model offers a novel rationale for legalising possession and consumption of drugs while continuing to prosecute drug dealers.  Our one-monitor set-up  provides a pedagogical explanation behind result (i).

5.    Rational Exuberance, (Joint with Paul Heidhues), European Economic Review, 56 (2012), pp. 1220 - 1240


We study a two-player investment game with information externalities. Necessary and sufficient conditions for a unique switching equilibrium are provided. When public news indicates that the investment opportunity is very profitable, too many types are investing early and investments should therefore be taxed. Conversely, any positive investment tax is suboptimally high if the public information is sufficiently unfavorable.



1.    Bidding and Drilling on Offshore Wildcat Tracts, mimeo, January 2014


A simple model is presented in which firms first participate in an offshore oil and gas auction and next decide whether and when to drill. If the discount factor is close to one, there essentially exists a unique equilibrium in which a ``low" bid may signal an unwillingness to drill early. This induces the other player to drill early. In turn, this induces some types to strategically bid low. If players are sufficiently patient, disclosing bids increases the quality of the drilling decision and it also increases revenues. Disclosing bids, however, may reduce total drilling.


Last Updated: March 2014