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Relating Product Prices to Long-Run Marginal Cost: Evidence from Solar Photovoltaic Modules
A basic tenet of microeconomics is that for a competitive industry in equilibrium the market price of a product will be equal to its marginal cost. This paper develops a model framework and a corresponding empirical inference procedure for…
Design of Macro-Prudential Stress Tests
We study the design of macro-prudential stress tests and capital requirements. The tests provide information about correlation in banks portfolios. The regulator chooses contingent capital requirements that create a liquidity buffer in case of a…
Retired or Fired: How Can Investors Tell If a CEO Was Pressured to Leave?
CEO succession at many companies occurs in a black box. Shareholders are not privy to boardroom discussions prior to the announcement of a CEO departure, and press releases announcing the change contain boilerplate language that does not make it…
Complex Asset Markets
We develop a dynamic equilibrium model of complex asset markets with endogenous entry and exit in which the investment technology of investors with more expertise is subject to less asset-specific risk. The joint equilibrium distribution of…
Is Google Search Behavior Related to Volatility? Incorporating Google Trends Data into a GARCH Model for Equity Volatility Authors
Intuitively, one would expect that internet search volume would contain valuable information about investor sentiment for a company. With the development of new data sources, such as Google Trends, this relationship can be more easily and…
Research: Political Polarization Is Changing How Americans Work and Shop
After the bruising and contentious 2016 U.S. presidential election, it’s not surprising that Americans’ evaluations of members of the opposite political party have reached an all-time low. According to data from the Pew Research…
Robo-Journalism and Capital Markets
In 2014, the Associated Press (AP) began using algorithms to write media articles about firms’ earnings announcements. These “robo-journalism” articles synthesize information from firms’ press releases, analyst reports, and stock performance, and…
Repatriation Taxes and Foreign Cash Holdings: The Impact of Anticipated Tax Reform
We examine whether anticipation of a repatriation tax reduction affects the amount of cash U.S. multinational corporations (MNCs) hold overseas. We find that U.S. MNCs most likely to benefit from a repatriation tax reduction accumulated…
Taking Aim: Corporate Opportunity Structures and Activists’ Selection of Corporate Targets
Scholars agree that the tenor of a firms’ past interactions with contentious activists - which represent a strong signal of the openness of a firm’s opportunity structures - impacts the likelihood that the firm will be targeted in the future.…
Why Some Digital Companies Should Delay Profitability for as Long as They Can
When most of the great companies of the industrial era were founded, even the most brilliant economists believed deeply in the law of diminishing marginal returns. At its core, the principle means that the more of something that is made, the less…
Mistreated: Why We Think We’re Getting Good Health Care and Why We’re Usually Wrong
The biggest problem in American health care is us.
Do you know how to tell good health care from bad health care? Guess again. As patients, we wrongly assume the “best” care is dependent mainly on the newest medications, the most…
Behavioral Processes in Long-Lag Intervention Studies
We argue that psychologists who conduct experiments with long lags between the manipulation and the outcome measure should pay more attention to behavioral processes that intervene between the manipulation and the outcome measure. Neglect of such…
Bounding Equilibrium Payoffs in Repeated Games With Private Monitoring
We provide a simple sufficient condition for the existence of a recursive upper bound on (the Pareto frontier of) the sequential equilibrium payoff set at a fixed discount factor in two-player repeated games with imperfect private monitoring. The…
Estimating Average Treatment Effects: Supplementary Analyses and Remaining Challenges
There is a large literature on semiparametric estimation of average treatment effects under unconfounded treatment assignment in settings with a fixed number of covariates. More recently attention has focused on settings with a large number of…
Healthier Than Thou? “Practicing What You Preach” Backfires by Increasing Anticipated Devaluation.
In the article, the beginning phrase of the second paragraph of the Internal Meta-Analysis of Studies 3 Through 5 section is incorrect. It should instead begin as follows: Across the three studies. The Monin et al. (2014) reference in both the…
How do Investors Compute the Discount Rate? They Use the CAPM
We provide guidance to corporate managers and investors on how to select the discount rate when evaluating investment opportunities. When making corporate investment decisions on behalf of the equity investors in a firm, an obvious choice is to…
Moral Traps: When Self-Serving Attributions Backfire in Prosocial Behavior
Two assumptions guide the current research. First, people’s desire to see themselves as moral disposes them to make attributions that enhance or protect their moral self-image: When approached with a prosocial request, people are inclined to…
On the Pursuit of Desired Attitudes: Wanting a Different Attitude Affects Information Processing and Behavior
Recent work suggests that in addition to actual attitudes, people often have desired attitudes that can vary in their congruence with their actual attitudes. We explored whether desired attitudes motivate goal-congruent outcomes by impacting…
Retired or Fired: How Can Investors Tell if a CEO Was Pressured to Leave?
CEO succession at many companies occurs in a black box. Shareholders are not privy to boardroom discussions prior to the announcement of a CEO departure, and press releases announcing the change contain boilerplate language that does not make it…
Spillovers Inside Conglomerates: Incentives and Capital
Using hand-collected data on divisional managers at conglomerates, we find that a change in industry surplus in one division generates large spillovers on managerial payoffs in other divisions of the same firm. These spillovers arise only…