Working Papers

This paper examines a life-cycle cost concept that applies to both manufacturing and service industries in which upfront capacity investments are essential. Borrowing from the energy literature, we refer to this cost measure as the levelized…

This paper explores the application of oblivious equilibrium to concentrated industries. We define an extended notion of oblivious equilibrium that we call partially oblivious equilibrium (POE) that allows for there to be a set of “dominant firms…

No abstract available.

We study the nature of deflation risk by extracting the objective distribution of inflation from the market prices of inflation swaps and options. We find that the market expects inflation to average about 2.5 percent over the next 30 years.…

An important characteristic of most renewable energy sources is their intermittent pattern of electricity generation. Yet, intermittency is usually ignored in life-cycle cost calculations intended to assess the competitiveness of electric power…

We propose a model of firm volatility based on customer-supplier connectedness. We assume that customers’ growth rate shocks influence the growth rates of their suppliers, larger suppliers have more customers, and the strength of a customer-…

Psychologists have long observed that people conform to majority opinion, a phenomenon sometimes referred to as the “bandwagon effect.” In the political domain people learn about prevailing public opinion via ubiquitous polls, which may…

This study determines whether voluntary adoption of IFRS is associated with increased comparability of accounting amounts and attendant capital market benefits. After “adopting” firms voluntarily adopt IFRS, their accounting amounts become…

The relation between aggregate earnings and aggregate returns is complex and not fully understood. For example, in contrast to firm-level relations, prior literature finds aggregate earnings changes and aggregate stock returns are negatively…

About 10% of US employees now regularly work from home (WFH), but there are concerns this can lead to “shirking from home.” We report the results of a WFH experiment at CTrip, a 16,000- employee, NASDAQ-listed Chinese travel agency. Call center…

I build a model of balance sheet recessions where financial frictions are derived from a moral hazard problem. I show that TFP shocks are amplified through a balance sheet channel only if the private action of the agent exposes him to aggregate…

Supplementing the discussion in our book The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It, this paper examines the plausibility and relevance of claims in banking theory that fragility in bank funding is useful…

We contend that buyers received false information about the true quality of assets in contractual disclosures by intermediaries during the sale of mortgages in the $2 trillion non-agency market. We construct two measures of misrepresentation of…

We survey the theoretical and empirical literature on decentralization within firms. We first discuss how the concept of incomplete contracts shapes our views about the organization of decision-making within firms. We then overview the empirical…

The financial crisis of 2007–09 has spurred significant ongoing changes in the “pipes and valves” through which cash and risk flow through the center of our financial system. These include adjustments to the forms of lender-of-last-…

We define the class of two-player zero-sum games with payoffs having mild discontinuities, which in applications typically stem from how ties are resolved. For games in this class we establish sufficient conditions for existence of a value of the…

We study a dynamic market with asymmetric information that creates the lemons problem. We compare efficiency of the market under different assumptions about the timing of trade. We identify positive and negative aspects of dynamic trading,…

This paper aims to understand the impact of temporal spacing between ad exposures on the likelihood of a consumer purchasing the advertised product. I create an individual-level data set with exogenous variation in the spacing and intensity of…

Random graph generation is an important tool for studying large complex networks and recently has been extensively used by biologists, computer scientists, economists, electrical engineers, and mathematical sociologists. Despite many remarkable…

Across six field and laboratory experiments, participants given a concretely-framed prosocial goal (e.g., making someone smile, increasing recycling) felt happier after performing a goal-directed act of kindness than did those who were assigned a…