These papers are working drafts of research which often appear in final form in academic journals. The published versions may differ from the working versions provided here.
SSRN Research Paper Series
The Social Science Research Network’s Research Paper Series includes working papers produced by Stanford GSB the Rock Center.
You may search for authors and topics and download copies of the work there.
The Allocation of Decision Authority to Human and Artificial Intelligence
The allocation of decision authority by a principal to either a human agent or an artificial intelligence (AI) is examined. The principal trades off an AI’s more aligned choice with the need to motivate the human agent to expend effort in…
Benchmarking Global Production Sourcing Decisions: Where and Why Firms Offshore and Reshore
This paper reports on the results of a global field study conducted in 2014 and 2015 among leading manufacturers from a wide range of industries. It provides insights on managerial practices that concern production sourcing and on the factors…
Towards a Better Financial System
A healthy and stable financial system enables efficient resource allocation and risk sharing. A reckless and distorted system, however, causes enormous harm. The cycles of boom, bust, and crisis that repeatedly plague banking and finance are…
Measuring Risk Information
We develop a measure of how information events impact investors’ perceptions of firms’ riskiness. We derive this measure from an option-pricing model where investors anticipate an announcement containing information on the mean and variance of…
Risk Premium Shocks Can Create Inefficient Recessions
We develop an equilibrium theory of business cycles driven by spikes in risk premiums that depress business demand for capital and labor. Aggregate shocks increase firms’ uninsurable idiosyncratic risk and raise risk premiums. We show that risk…
Stable Prediction with Model Misspecification and Agnostic Distribution Shift
For many machine learning algorithms, two main assumptions are required to guarantee performance. One is that the test data are drawn from the same distribution as the training data, and the other is that the model is correctly specified. In real…
Managing Market Thickness in Online B2B Markets
Platforms can obtain sizable returns by operationally managing their market thickness, i.e., the availability of supply-side inventory. Using data from a natural experiment on a major B2B auction platform specializing in the $424 billion…
Evaluating Firm-Level Expected-Return Proxies: Implications for Estimating Treatment Effects
We introduce a parsimonious framework for choosing among alternative expected-return proxies (ERPs) when estimating treatment effects. By comparing ERPs’ measurement-error variances in the cross-section and time series, we provide new evidence on…
Identification in Auction Models with Interdependent Costs
This paper provides a positive identification result for first-price procurement models with asymmetric bidders, statistically dependent private signals,
and interdependent costs. When bidders are risk neutral, the model’s payoff-relevant…
Online Appendix for “Identification in Auction Models with Interdependent Costs”
An Empirical Framework for Sequential Assignment: The Allocation of Deceased Donor Kidneys
A transplant can improve a patient’s life while saving several hundreds of thousands of dollars in healthcare expenditures. Organs from deceased donors, like many other scarce public resources (e.g. public housing, child-care, publicly funded…
Supplement to “Identification in Auction Models with Interdependent Costs”
Squaring Venture Capital Valuations with Reality
We develop a valuation model for venture capital-backed companies and apply it to 135 US unicorns, that is, private companies with reported valuations above $1 billion. We value unicorns using financial terms from legal filings and find that…
The Decline of Too Big to Fail
For globally systemically important banks (G-SIBs) with U.S. headquarters, we find large post-Lehman reductions in market-implied probabilities of government bailout, along with big increases in debt financing costs for these banks after…
Executive Pay Transparency and Relative Performance Evaluation: Evidence from the 2006 Pay Disclosure Reforms
Pay for non-performance is among the most prominent arguments of executive rent extraction, especially Bertrand and Mullainathan’s (2001) pay for luck. We revisit their finding over the last two decades, 1997 through 2016. Pay for luck presents…
Unintended Consequences of Eliminating Tax Havens
Eliminating firms’ access to tax havens can have unintended consequences for their domestic economic activity. We study a policy that limited profit shifting by U.S. multinationals and show it raised the tax cost of domestic investment. Firms…
Competition Under Social Interactions and the Design of Education Policies
This paper studies families’ preferences for peers in the school and the implications of those preferences for the distribution of academic outcomes. I develop an equilibrium model of school competition and student sorting under social…
Do Targeted Business Tax Subsidies Achieve Expected Benefits?
We examine the association between thousands of state and local firm-specific tax subsidies and business activity in the surrounding county, measured as the number of employees, aggregate wages, per capita employment, per capita wages, and number…
Beyond Myopia: Scarcity and Intertemporal Choice Reversals
It is widely understood that scarcity focuses people on “here and now” problems, causing myopic, impulsive decisions. Our work challenges this basic premise and asks whether scarcity can ever lead to increased patience. We suggest that existing…
Deposit Withdrawals
This paper develops a new approach to isolate and quantify the extent to which deposit withdrawals are due to liquidity, exposure to policy risk, or expectations about how other depositors will behave. We use high frequency micro-data on insured…