Zihong Huang

Zihong Huang

Assistant Professor @ Rawls, Texas Tech University

Projects by Tags

Artificial Intelligence

AI-empowered Venture Capital (VC): The Impact of AI Adoption on VC Firms’ Success

Working paper, presented in WeB 2020, CIST 2021

In the venture capital (VC) industry, a new breed of VC firms has emerged to embrace AI-empowered investment strategy instead of relying on human judgments. Although AI has already demonstrated advantages over humans in some domains, it is unclear whether AI can lead to superior performance in the venture capital industry. This research fills this gap by estimating the causal impact of a VC firm’s adoption of AI-empowered investment strategy on its success using matched portfolios of startups from AI-empowered and non-AI-empowered VC firms. We find that AI adoption tends to increase the success of a VC firm in terms of successful exits (e.g. IPO and acquisition) of startups it invests in. In addition, we also find that AI-empowered investment strategy can reduce racial bias but increase gender and local bias. The increase of gender bias is responsible for the superior performance of AI-empowered investment strategy while the reduction of racial bias and the increase of local bias is not.

Budget Constraints

Budget Induced Strategic Bidding in Multiunit Online Auctions

Working paper, presented in WITS 2019

In this paper, we investigate the role of the budget constraint as a reason for jump bidding in multi-unit ascending online auctions. We theoretically derive the conditions under which jump bidding outperforms the participatory strategy for bidders at their margin. We find that the budget gap and the bid increment jointly influence the bidding strategy for the budget-constrained bidder at his margin. Based on theoretical analysis, we propose a hybrid bidding strategy. Then we use a Discrete Event Simulation model to validate our proposed hybrid strategy can outperform participatory and jump strategies under certain conditions and to examine how the budget gap and the bid increment influence the bidding strategy. We find that as the ratio of the budget gap over bid increment increases, the optimal bidding strategy at margins changes from a pure Participatory strategy to a hybrid one, and finally, becomes a pure Jump strategy.

Causal Inference

AI-empowered Venture Capital (VC): The Impact of AI Adoption on VC Firms’ Success

Working paper, presented in WeB 2020, CIST 2021

In the venture capital (VC) industry, a new breed of VC firms has emerged to embrace AI-empowered investment strategy instead of relying on human judgments. Although AI has already demonstrated advantages over humans in some domains, it is unclear whether AI can lead to superior performance in the venture capital industry. This research fills this gap by estimating the causal impact of a VC firm’s adoption of AI-empowered investment strategy on its success using matched portfolios of startups from AI-empowered and non-AI-empowered VC firms. We find that AI adoption tends to increase the success of a VC firm in terms of successful exits (e.g. IPO and acquisition) of startups it invests in. In addition, we also find that AI-empowered investment strategy can reduce racial bias but increase gender and local bias. The increase of gender bias is responsible for the superior performance of AI-empowered investment strategy while the reduction of racial bias and the increase of local bias is not.

Fake Accounts

Economics of Social Media Fake Accounts

Major revision at Management Science
Download paper: PDF SSRN

Amid the rise of the influencer economy, fake social media accounts have become a prevalent problem on many social media platforms. Yet the problem of fake accounts is still poorly understood and so is the effectiveness of coping strategies. This research models the ecosystem of fake accounts in an influencer economy and obtains insights on fake-account purchasing behaviors, the impact of anti-fake efforts, and the roles of social media literacy, anti-fake technology, and costs of fake accounts. We show that not only low-quality influencers may buy fake accounts to mimic high-quality ones in a “pooling” equilibrium, high-quality influencers may also buy to prevent mimicry in a “costly-separating” equilibrium. There is also a “naturally-separating” equilibrium where the two types are separated without buying fake accounts. We find that increasing anti-fake efforts and social media literacy may cause more fake accounts. The platform generally prefers either a zero-effort pooling equilibrium or a high-effort naturally-separating equilibrium. Compared to the level of anti-fake efforts preferred by consumers, the platform may be overly or insufficiently aggressive. Some anti-fake strategies, such as increasing social media literacy and fake-account costs, may benefit consumers but not the platform. One exception is increasing the effectiveness of anti-fake technology, which benefits both the platform and consumers and reduces the number of fake accounts.

Influencer Economy

Economics of Social Media Fake Accounts

Major revision at Management Science
Download paper: PDF SSRN

Amid the rise of the influencer economy, fake social media accounts have become a prevalent problem on many social media platforms. Yet the problem of fake accounts is still poorly understood and so is the effectiveness of coping strategies. This research models the ecosystem of fake accounts in an influencer economy and obtains insights on fake-account purchasing behaviors, the impact of anti-fake efforts, and the roles of social media literacy, anti-fake technology, and costs of fake accounts. We show that not only low-quality influencers may buy fake accounts to mimic high-quality ones in a “pooling” equilibrium, high-quality influencers may also buy to prevent mimicry in a “costly-separating” equilibrium. There is also a “naturally-separating” equilibrium where the two types are separated without buying fake accounts. We find that increasing anti-fake efforts and social media literacy may cause more fake accounts. The platform generally prefers either a zero-effort pooling equilibrium or a high-effort naturally-separating equilibrium. Compared to the level of anti-fake efforts preferred by consumers, the platform may be overly or insufficiently aggressive. Some anti-fake strategies, such as increasing social media literacy and fake-account costs, may benefit consumers but not the platform. One exception is increasing the effectiveness of anti-fake technology, which benefits both the platform and consumers and reduces the number of fake accounts.

Judgment Biases

AI-empowered Venture Capital (VC): The Impact of AI Adoption on VC Firms’ Success

Working paper, presented in WeB 2020, CIST 2021

In the venture capital (VC) industry, a new breed of VC firms has emerged to embrace AI-empowered investment strategy instead of relying on human judgments. Although AI has already demonstrated advantages over humans in some domains, it is unclear whether AI can lead to superior performance in the venture capital industry. This research fills this gap by estimating the causal impact of a VC firm’s adoption of AI-empowered investment strategy on its success using matched portfolios of startups from AI-empowered and non-AI-empowered VC firms. We find that AI adoption tends to increase the success of a VC firm in terms of successful exits (e.g. IPO and acquisition) of startups it invests in. In addition, we also find that AI-empowered investment strategy can reduce racial bias but increase gender and local bias. The increase of gender bias is responsible for the superior performance of AI-empowered investment strategy while the reduction of racial bias and the increase of local bias is not.

Jump Bidding

Budget Induced Strategic Bidding in Multiunit Online Auctions

Working paper, presented in WITS 2019

In this paper, we investigate the role of the budget constraint as a reason for jump bidding in multi-unit ascending online auctions. We theoretically derive the conditions under which jump bidding outperforms the participatory strategy for bidders at their margin. We find that the budget gap and the bid increment jointly influence the bidding strategy for the budget-constrained bidder at his margin. Based on theoretical analysis, we propose a hybrid bidding strategy. Then we use a Discrete Event Simulation model to validate our proposed hybrid strategy can outperform participatory and jump strategies under certain conditions and to examine how the budget gap and the bid increment influence the bidding strategy. We find that as the ratio of the budget gap over bid increment increases, the optimal bidding strategy at margins changes from a pure Participatory strategy to a hybrid one, and finally, becomes a pure Jump strategy.

Multiunit Online Auctions

Budget Induced Strategic Bidding in Multiunit Online Auctions

Working paper, presented in WITS 2019

In this paper, we investigate the role of the budget constraint as a reason for jump bidding in multi-unit ascending online auctions. We theoretically derive the conditions under which jump bidding outperforms the participatory strategy for bidders at their margin. We find that the budget gap and the bid increment jointly influence the bidding strategy for the budget-constrained bidder at his margin. Based on theoretical analysis, we propose a hybrid bidding strategy. Then we use a Discrete Event Simulation model to validate our proposed hybrid strategy can outperform participatory and jump strategies under certain conditions and to examine how the budget gap and the bid increment influence the bidding strategy. We find that as the ratio of the budget gap over bid increment increases, the optimal bidding strategy at margins changes from a pure Participatory strategy to a hybrid one, and finally, becomes a pure Jump strategy.

Signaling Game

Economics of Social Media Fake Accounts

Major revision at Management Science
Download paper: PDF SSRN

Amid the rise of the influencer economy, fake social media accounts have become a prevalent problem on many social media platforms. Yet the problem of fake accounts is still poorly understood and so is the effectiveness of coping strategies. This research models the ecosystem of fake accounts in an influencer economy and obtains insights on fake-account purchasing behaviors, the impact of anti-fake efforts, and the roles of social media literacy, anti-fake technology, and costs of fake accounts. We show that not only low-quality influencers may buy fake accounts to mimic high-quality ones in a “pooling” equilibrium, high-quality influencers may also buy to prevent mimicry in a “costly-separating” equilibrium. There is also a “naturally-separating” equilibrium where the two types are separated without buying fake accounts. We find that increasing anti-fake efforts and social media literacy may cause more fake accounts. The platform generally prefers either a zero-effort pooling equilibrium or a high-effort naturally-separating equilibrium. Compared to the level of anti-fake efforts preferred by consumers, the platform may be overly or insufficiently aggressive. Some anti-fake strategies, such as increasing social media literacy and fake-account costs, may benefit consumers but not the platform. One exception is increasing the effectiveness of anti-fake technology, which benefits both the platform and consumers and reduces the number of fake accounts.

Social Media

Economics of Social Media Fake Accounts

Major revision at Management Science
Download paper: PDF SSRN

Amid the rise of the influencer economy, fake social media accounts have become a prevalent problem on many social media platforms. Yet the problem of fake accounts is still poorly understood and so is the effectiveness of coping strategies. This research models the ecosystem of fake accounts in an influencer economy and obtains insights on fake-account purchasing behaviors, the impact of anti-fake efforts, and the roles of social media literacy, anti-fake technology, and costs of fake accounts. We show that not only low-quality influencers may buy fake accounts to mimic high-quality ones in a “pooling” equilibrium, high-quality influencers may also buy to prevent mimicry in a “costly-separating” equilibrium. There is also a “naturally-separating” equilibrium where the two types are separated without buying fake accounts. We find that increasing anti-fake efforts and social media literacy may cause more fake accounts. The platform generally prefers either a zero-effort pooling equilibrium or a high-effort naturally-separating equilibrium. Compared to the level of anti-fake efforts preferred by consumers, the platform may be overly or insufficiently aggressive. Some anti-fake strategies, such as increasing social media literacy and fake-account costs, may benefit consumers but not the platform. One exception is increasing the effectiveness of anti-fake technology, which benefits both the platform and consumers and reduces the number of fake accounts.

Social Media Literacy

Economics of Social Media Fake Accounts

Major revision at Management Science
Download paper: PDF SSRN

Amid the rise of the influencer economy, fake social media accounts have become a prevalent problem on many social media platforms. Yet the problem of fake accounts is still poorly understood and so is the effectiveness of coping strategies. This research models the ecosystem of fake accounts in an influencer economy and obtains insights on fake-account purchasing behaviors, the impact of anti-fake efforts, and the roles of social media literacy, anti-fake technology, and costs of fake accounts. We show that not only low-quality influencers may buy fake accounts to mimic high-quality ones in a “pooling” equilibrium, high-quality influencers may also buy to prevent mimicry in a “costly-separating” equilibrium. There is also a “naturally-separating” equilibrium where the two types are separated without buying fake accounts. We find that increasing anti-fake efforts and social media literacy may cause more fake accounts. The platform generally prefers either a zero-effort pooling equilibrium or a high-effort naturally-separating equilibrium. Compared to the level of anti-fake efforts preferred by consumers, the platform may be overly or insufficiently aggressive. Some anti-fake strategies, such as increasing social media literacy and fake-account costs, may benefit consumers but not the platform. One exception is increasing the effectiveness of anti-fake technology, which benefits both the platform and consumers and reduces the number of fake accounts.

Strategic-At-Margin

Budget Induced Strategic Bidding in Multiunit Online Auctions

Working paper, presented in WITS 2019

In this paper, we investigate the role of the budget constraint as a reason for jump bidding in multi-unit ascending online auctions. We theoretically derive the conditions under which jump bidding outperforms the participatory strategy for bidders at their margin. We find that the budget gap and the bid increment jointly influence the bidding strategy for the budget-constrained bidder at his margin. Based on theoretical analysis, we propose a hybrid bidding strategy. Then we use a Discrete Event Simulation model to validate our proposed hybrid strategy can outperform participatory and jump strategies under certain conditions and to examine how the budget gap and the bid increment influence the bidding strategy. We find that as the ratio of the budget gap over bid increment increases, the optimal bidding strategy at margins changes from a pure Participatory strategy to a hybrid one, and finally, becomes a pure Jump strategy.

Venture Capital

AI-empowered Venture Capital (VC): The Impact of AI Adoption on VC Firms’ Success

Working paper, presented in WeB 2020, CIST 2021

In the venture capital (VC) industry, a new breed of VC firms has emerged to embrace AI-empowered investment strategy instead of relying on human judgments. Although AI has already demonstrated advantages over humans in some domains, it is unclear whether AI can lead to superior performance in the venture capital industry. This research fills this gap by estimating the causal impact of a VC firm’s adoption of AI-empowered investment strategy on its success using matched portfolios of startups from AI-empowered and non-AI-empowered VC firms. We find that AI adoption tends to increase the success of a VC firm in terms of successful exits (e.g. IPO and acquisition) of startups it invests in. In addition, we also find that AI-empowered investment strategy can reduce racial bias but increase gender and local bias. The increase of gender bias is responsible for the superior performance of AI-empowered investment strategy while the reduction of racial bias and the increase of local bias is not.