Working Papers

Under Rate-of-Return regulation, a firm’s product prices are constrained by the requirement that investors do not earn more an allowable return on the firm’s assets. This paper examines the dynamic properties of the Rate-of-Return regulation…

Consumers want to be happy, and marketers are increasingly trying to appeal to consumers’ pursuit of happiness. However, the results of six studies reveal that what happiness means varies, and consumers’ choices reflect those differences. In some…

We discuss how regression discontinuity designs arise naturally in settings where firms target marketing activity at consumers, and discuss how this aspect may be exploited for econometric inference of causal effects of marketing effort. Our main…

Prequential testing of a forecaster is known to be manipulable if the test must pass an informed forecaster for all possible true distributions. Stewart (2011) provides a non- manipulable prequential likelihood test that only fails an informed…

Price controls lead to misallocation of goods and encourage rent-seeking. The misallocation e¤ect alone is enough to ensure that consumer surplus is always reduced by a price control in an otherwise-competitive market with convex demand if supply…

This paper examines the relationship between firm performance and the recommendations provided by Institutional Shareholder Services (ISS), the largest proxy advisory firm in the United States, regarding shareholder votes in stock option exchange…

Can combat experience foster organizational skills that engender political collective action? We use the arbitrary assignment of troops to frontline combat in World War 2 to identify the effect of combat experience on two channels that change…

We examine a duopoly where one of the firms does not maximize profit, but instead maximizes customer surplus subject to a profit constraint. (Customer surplus for a firm is the sumo f its customers individual consumer surpluses, i.e., the dollar…

Is there a limit to trade cooperation that the WTO can facilitate? In this paper I present a theory of the WTO in which the WTO is an equilibrium outcome of multiple bilateral repeated prisoners’ dilemma games among countries. The equilibrium…

This paper addresses the question of how exchange rates affect consumer demand in markets where advertising plays an important role. We identify an effect that has not been emphasized in the existing literature: when foreign exchange rates…

The English Parliament’s struggle for supremacy in the seventeenth century was crucial for the development of representative government in the English-speaking world, yet its lessons continue to be debated. This paper provides the first…

This paper presents evidence that when an analyst makes an out-of-consensus forecast of a company’s quarterly earnings that turns out to be incorrect, she escalates her commitment to maintaining an out-of-consensus view on the company. Relative…

We show whether central clearing of a particular class of derivatives lowers counterparty risk. For plausible cases, adding a central clearing counterparty (CCP) for a class of derivatives such as credit default swaps reduces netting…

While it is recognized that the high degree of leverage used by financial institutions creates systemic risks and other negative externalities, many argue that financial institutions must rely on extensive debt financing since equity financing is…

This study examines the use of performance-based incentives for internal monitors (general counsel and chief internal auditor) and whether these incentives impair monitors independence by aligning their interests with the interests of those being…

The non-tradability of human capital is often cited for the failure of traditional asset pricing theory to explain agents’ portfolio holdings. In this paper we argue that the opposite might be true | traditional models might not be able to…

Firms central in the interlocking boardroom network earn superior risk-adjusted stock returns. Initiating a long position in the most central firms and a short position in the least central firms earns an average risk-adjusted return of 4.68% per…

We show how to use micro-level survey data from a tracking study on brand awareness in conjunction with data on sales and advertising expenditures to improve the specification, estimation, and interpretation of aggregate discrete choice models of…

This study investigates the relation between corporate governance and CEO pay levels, and the extent to which the higher pay found in firms using compensation consultants is related to governance differences. Using proxy statement disclosures…