Michael Powell
Associate Professor of Strategy at Kellogg School of Management
Biography
Kellogg School of Management
Michael Powell received his PhD in Economics from the Massachusetts Institute of Technology in 2011. He is currently an Associate Professor in the Strategy Department. Prior to coming to Kellogg, he was a Postdoctoral Fellow of Applied Economics at the Sloan School of Management at MIT. Professor Powell's research interests include organizational economics and industrial organization. His research has focused on understanding how firms are organized and how their organization interacts with market equilibrium. His work has been published in the Quarterly Journal of Economics, Journal of Labor Economics, Journal of Law, Economics & Organization, and American Economic Journal: Microeconomics.
Education
- Ph.D, 2011, Economics, Massachusetts Institute of Technology
- MA, 2006, Economics, University of California, Los Angeles
- B.A., 2006, Economics, University of California, Los Angeles
- A.A., 2003, Liberal Arts, West Valley College
Academic Positions
- Assistant Professor of Management and Strategy, Kellogg School of Management, Northwestern University, 2013-present
- Donald P. Jacobs Scholar & Assistant Professor of Management & Strategy, Kellogg School of Management, Northwestern University, 2012-2013
- Postdoctoral Fellow in Applied Economics, Sloan School of Management, Massachusetts Institute of Technology, 2011-2012
Professional Experience
Program committee: NBER Organizational Economics (2009, 2011), 2009-2011 Referee for: American Economic Journal: Applied Economics, Journal of Economics and Management Strategy, Journal of Labor Economics, Journal of Law and Economics, Journal of Public Economics, 1-present
Awards
- National Science Foundation Graduate Research Fellowship, 2007-2011
- MIT Presidential Fellowship, 2006-2008
- UCLA Departmental Scholar in Economics, 2004-2006
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Cases
Fehr, Ernst, Michael Powell and Tom Wilkening. 2017. Behavioral Constraints on the Design of Subgame-Perfect Implementation Mechanisms.
The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational, and institutional economics. However, subgame-perfect implementation (SPI) mechanisms, which are based on off-equilibrium arbitration clauses that impose fines for lying and the inappropriate use of arbitration, can be used to render payoff-relevant observable information verifiable. Thus, if SPI mechanisms work as predicted, they undermine the foundations of important economic results based on the observable but non-verifiable assumption. Empirical evidence on the effectiveness of SPI mechanisms is, however, scarce. In this paper we show experimentally that SPI mechanisms have severe behavioral limitations. They induce retaliation against legitimate uses of arbitration and thus make parties reluctant to trigger arbitration. The inconsistent use of arbitration eliminates the incentives to take efficient actions and leads to costly disagreements such that individuals, if given the choice, opt out of the mechanism in the majority of the cases. Incentive-compatible redesigns of the mechanism solve some of these problems but generate new ones such that the overall performance of the redesigned mechanisms remains low. Our results indicate that there is little hope for SPI mechanisms to solve verifiability problems unless they are made retaliation-proof and, more generally, robust to other-regarding preferences.
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