Philipp Strack - Research Focus | Center for Algorithms, Data, and Market Design at Yale

Automated Market Making on Blockchains: Automated market makers are currently among the most important institutions run completely on blockchains like ethereum or solana. They allow people to exchange one commodity into another for example USD into Bitcoin and automatically quote prices for doing so. The largest exchange Uniswap currently processes orders valued around 300 million USD per day. One problem these exchanges face is that most of them currently are incurring losses due to adverse selection in the trades they process. I am interested in finding out if there are improvements which can be made to the trading algorithms of automated market makers to make them profitable.

Optimal Taxation of Carbon in Unequal Societies: We ask the question how one can tax goods such as natural gas, or air travel which cause substantial pollution without disadvantaging the poor. One solution is to simply prohibit the sale of the good. For example many places ban the sale of single use plastic bags or the use of Chlorofluorocarbon in aerosol cans. Another mechanism which is commonly discussed are Pigouvian (or externality) taxes. Such taxes ask every person in society to pay a tax proportional to how much harm they cause by consuming the good. These taxes have been often criticized for disproportionally hurting the poor. A natural question is what type of regulations is best? We explore this question in a stylized model and ask what are optimal measures for a planner who takes into account that it is harder for the poor to pay increased prices for goods. Optimal taxes have interesting features: For example, they are completely redistributed their revenue to the population, e.g. every person receives an equal paycheck at the end of the year. They might be progressive such that e.g. the second flight a person takes in a year might incur higher taxes than the first (an idea discussed for example by Greenpeace).