Working Papers

We consider a non-stationary variant of a sequential stochastic optimization problem, where the underlying cost functions may change along the horizon. We propose a measure, termed variation budget, that controls the extent of said change,…

Organizational ambidexterity refers to the ability of an organization to both explore and exploitto compete in mature technologies and markets where efficiency, control, and incremental improvement are prized and to also compete in new…

When subjects interact in continuous time, their ability to cooperate may dramatically increase. In an experiment, we study the impact of different time horizons on cooperation in (quasi) continuous time prisoner’s dilemmas. We find that…

To ensure that individual actors take certain actions, community enforcement may be required. This can present a rules-versus-discretion dilemma: It can become impossible to employ discretion based on information that is not widely held, because…

Competition for seats in elite U.S. graduate school programs has intensified

dramatically over the past 40 years. In this paper, we study the market for

young attorneys to illuminate the role that elite graduate programs play in…

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 distinctiveness, or…

Understanding the mechanisms by which political advertising affects voters is crucial for evaluating the welfare effects of campaign finance and election regulation. This paper develops a method to distinguish between two alternative mechanisms…

We study the sources of match-specific value at large American law firms by analyzing how graduates of law schools group into law firms. We measure the degree to which lawyers from certain schools concentrate within firms and then analyze how…

The recession of 2007-09 witnessed high rates of unemployment that have been slow to recede. This has led many to conclude that structural changes have occurred in the labor market and that the economy will not return to the low rates of…

How and by how much do supervisors enhance worker productivity? Using a company-based data set on the productivity of technology-based services workers, supervisor effects are estimated and found to be large. Replacing a boss who is in the…

We study a dynamic model of earnings quality and earnings management in which firms take into account both long- and short-term considerations when reporting earnings. In addition to providing predictions about time series properties of earnings…

We propose a redesign of sovereign Credit Default Swaps (CDS). Under our proposal, a notional CDS position of €100 can be settled by the delivery of whatever package of instruments a sovereign gives in exchange for legacy bonds with a face value…

We examine the pricing of financial crash insurance during the 2007-2009 financial crisis in U.S. option markets. A large amount of aggregate tail risk is missing from the price of financial sector crash insurance during the financial crisis. The…

This paper studies the joint effect of conservatism and aggregation on the cost of equity capital and the efficiency of debt contracts. In the model, a firm’s two assets are valued at either the lower-of-cost-or-market or fair value and the…

We analyze shareholders’ incentives to change the leverage of a firm that has already borrowed substantially. As a result of debt overhang, shareholders have incentives to resist reductions in leverage that make the remaining debt safer. This…

We use variation in wind speeds at surfing locations in Switzerland as exogenous shifters of users’ propensity to post content about their surfing activity onto an online social network. We exploit this variation to test whether users online…

This submission discusses implications for the quality and safety of financial markets of proposed rules implementing the market-making provisions of section 13 of the Bank Holding Company Act, commonly known as the “Volcker Rule.” The proposed…

We measure the repo funding extended by money market funds (MMF) and securities lenders to the shadow banking system, including quantities, haircuts, and repo rates by type of underlying collateral. We find that repo played only a small role in…

When do people feel as if they are rich in time? Not often, research and daily experience suggest. However, three experiments showed that participants who felt awe, relative to other emotions, felt they had more time available (Experiments 1, 3)…