Publications

That citizens engage in retrospective voting is widely established in the literature. But to what extent is retrospection affected by the expectations that leaders set in advance? We develop a theoretical framework of how expectation setting…

 Fixed statutes and regulations often have variable consequences over time. If left unattended, such drift can severely erode the performance of government as an institution of representation. To better understand the mechanics of…

Many advertisers are reluctant to shift a large proportion of their advertising budgets to the Internet because they still view television advertising as the main vehicle for building a brand. Using a unique and rich data set comprising 20…

Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over an infinite horizon. We compare two institutions that differ…

Although cooperation between groups is not unusual, most forms of human cooperation are in-group bounded and, sometimes, motivated by the desire to ward-off and subordinate rivaling out-groups. Building on evolutionary perspectives and models, we…

We analyze how banks’ responses to asset gains and losses can result in procyclical leverage. The analysis reveals that absent differences in regulatory risk weights across assets, leverage is not procyclical. We test predictions from the…

Excessive leverage (indebtedness) in banking endangers the public and distorts the economy. Yet current and proposed regulations only tweak previous regulations that failed to provide financial stability. This paper discusses the forces that have…

We propose that category membership can operate as a collective market signal for quality when low-quality producers face higher costs of gaining membership. The strength of membership as a collective signal increases with the sharpness of the…

As participant recruitment and data collection over the Internet have become more common, numerous observers have expressed concern regarding the validity of research conducted in this fashion. One growing method of conducting research over the…

We establish an important role for the firm by studying capital reallocation decisions of mutual fund firms. At least 30% of the value mutual fund managers add can be attributed to the firm’s role in efficiently allocating capital amongst…

We outline key steps necessary to reform the London Interbank Offered Rate (LIBOR) so as to improve its robustness to manipulation. We first discuss the role of financial benchmarks such as LIBOR in promoting over-the-counter market…

This paper studies the effect of performance feedback on tournament outcomes, when a possibly dishonest principal may manipulate the agents’ expectations to stimulate their effort. Under plausible circumstances, an increase in the principal’s…

Currently available medication for treating many chronic diseases is often effective only for a subgroup of patients, and biomarkers accurately assessing whether an individual belongs to this subgroup do not exist. In such settings, physicians…

We show that the price of a Treasury bond and an inflation-swapped Treasury Inflation-Protected Securities (TIPS) issue exactly replicating the cash flows of the Treasury bond can differ by more than $20 per $100 notional. Treasury bonds are…

The question of whether management control systems (MCS) adopted by start-up companies are valuable is examined. We investigate an international sample of start-ups, including their detailed MCS adoptions and financing histories. We find that…

We examine how the composition of public debt, broken down by currency, maturity, holder profile and marketability, has responded to major debt accumulation and consolidation episodes during 1900-2011. Covering thirteen advanced economies, we…

This paper studies dynamic disclosure when the firm value evolves stochastically over time. The presence of litigation risk, arising from the failure to disclose unfavorable information, not only prompts bad news disclosures but also crowds out…

Entrepreneurship requires creativity and business acumen. Creativity may decline with age, but business skills increase with experience in high level positions. Having too many older workers in society slows entrepreneurship. Not only are older…

Dutta and Fan (Rev Account Stud, 2014), this issue, study the implications of earnings management on managerial compensation, in a two-period LEN setting. They…