Working Papers

We analyze the classic problem of sustaining trust when cheating and leaving trading partners is easy, and outside enforcement is difficult. We construct equilibria where individuals are loyal to smaller groups– communities– that allow…

This paper develops a model of user adoption and use of virtual currency (such as Bitcoin), and focusing on the dynamics of adoption in the presence of frictions arising from exchange rate uncertainty. The theoretical model can be used…

We survey 885 institutional venture capitalists (VCs) at 681 firms to learn how they make decisions across eight areas: deal sourcing; investment selection; valuation; deal structure; post-investment value-added; exits; internal firm organization…

Based on two samples of high quality personality data for chief executive officers (CEOs), we use linguistic features extracted from conferences calls and statistical learning techniques to develop a measure of CEO personality in terms of the Big…

Size discovery is the use of trade mechanisms by which large quantities of an asset can be exchanged at a price that does not respond to price pressure. Primary examples of size discovery include “workup” in Treasury markets, “matching sessions”…

Rural electrification rates in India lag behind government goals, in part due to the inability of distribution companies (discoms) to fund central grid expansion. In the absence of central grid electrification, mini-grids offer significant…

We propose a new source of cross-sectional variation that may identify causal impacts of government spending on the economy. We use the fact that a large number of federal spending programs depend on local population levels. Every ten years, the…

Bargaining power allows equity holders to recover a fraction of residual assets in bankruptcy, therefore reducing their exposure to default risk. We develop an agency-based model and provide the first evidence via structural estimation that…

Equity is a cheap source of funding for a country’s largest financial institutions. In a large panel of 31 countries, we find that the stocks of a country’s largest financial companies earn returns that are significantly lower than stocks of non-…

We provide the first large-sample evidence of banks playing an important role in facilitating tax planning by client firms. Capturing bank-client relationships using lending contracts and measuring borrower tax avoidance with the three-year cash…

Under 2nd Review, Management Science

Women pursue managerial credentials at nearly the same rate as men but evidence suggests they receive lower salaries from the onset of their managerial careers. While demand-side…

This paper examines the effect of market participants’ information processing costs on firms’ disclosure choice. Using the recent eXtensible Business Reporting Language (XBRL) regulation as an exogenous shock to these information processing costs…

I discuss the motivations and actions (or inaction) of individuals in the financial system, governments, central banks, academia and the media that collectively contribute to the persistence of a dangerous and distorted financial system and…

This paper quantitatively assesses time inconsistency, moral hazard, and political ideology in monopoly regulation of electricity distribution. We specify and estimate a dynamic model of utility regulation featuring investment and moral hazard.…

Since its rapid rise in early 2009, scholars have advanced a variety of explanations for popular support for the Tea Party movement. Here we argue that various political, economic, and demographic trends and events – e.g., the election of the…

We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to US firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent-…

Salient successes and failures, such as spectacular venture capital investments or agonizing bankruptcies, affect consensus beliefs about the viability of particular markets. We argue that collective sense making in the wake of such vital events…

We study the convergence of the predictive surface of regression trees and forests. To support our analysis we introduce a notion of adaptive concentration for regression trees. This approach breaks tree training into a model selection phase in…

We study the subgame perfect equilibria of two player stochastic games with perfect monitoring and geometric discounting. A novel algorithm is developed for calculating the discounted payoffs that can be attained in equilibrium. This algorithm…