Working Papers

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…

We estimate classification models of deceptive discussions during quarterly earnings conference calls. Using data on subsequent financial restatements (and a set of criteria to identify especially serious accounting problems), we label the…

The two major paradigms in the theoretical agency literature are moral hazard (i.e., hidden action) and adverse selection (i.e., hidden information). Prior research typically solves these problems in isolation, as opposed to simultaneously…

Entrepreneurship is risky. Most new technologies and new businesses fail. Shane (2008) reported that 25% of new businesses failed in the first year and that by the fifth year, fewer than half had survived. In the United Kingdom, Stark (2001)…

For an all-pay sealed-bid auction of an item for which each bidder’s realized value can depend on every bidder’s privately observed signal, existence of equilibria in behavioral strategies is established using only the assumption that bidders’…

For two symmetric bidders, weak monotonicity conditions are shown to imply existence of an equilibrium in mixed behavioral strategies for a sealed-bid first-price auction of an item for which each bidder’s value depends on every bidder’s observed…

A first-price sealed-bid auction of an item for which bidders are risk-neutral and have privately known values is shown to have an equilibrium in mixed behavioral strategies if the joint distribution of bidders’ values has a continuous density on…

Although a substantial amount of research has examined the link between money and happiness, far less has examined the link between time and happiness. This paper argues, however, that time plays a critical role in understanding happiness, and it…

Marketing researchers have used models of consumer demand to forecast future sales; to describe and test theories of consumer behavior; and to measure the response to marketing interventions. The basic framework typically starts from…