cssi/SciSciGPT-SciSciNet huggingface dataset:
Recurrent trade agreements and the value of external enforcement

Abstract This paper presents a theory of dynamic trade agreements in which external institutions, such as the WTO, play a central role in supporting credible enforcement. In our model, countries engage in ongoing negotiations, and, as a consequence, cooperative agreements become unsustainable in the absence of external enforcement institutions. By using mechanisms such as delays in dispute resolution and direct penalties, enforcement institutions can restore incentives for cooperation, despite the lack of coercive power. The occurrence of costly trade disputes, and the feasibility of mechanisms such as escape clauses, depend on the degree to which enforcement institutions can verify, and condition on, events that may lead to trade disputes.
Equilibrium in the two-player, k-double auction with affiliated private values

Abstract We present sufficient conditions for the existence of an increasing equilibrium in the two-player, k-double auction with affiliated private values. In the case k ∈ { 0 , 1 } there exists a unique equilibrium in non-dominated strategies. Applying this equilibrium, we provide a detailed example illustrating how dependence level affects strategic bidding. In the case k ∈ ( 0 , 1 ) we prove existence of a continuum of strictly increasing equilibria, and illustrate them using an example. Furthermore, we show that equilibria in the case of independent private values are pointwise limits of equilibria with strictly affiliated private values.
Financial Constraints and Product Market Competition: Ex-ante vs. Ex-post Incentives ?

This paper analyzes the interaction of financing and output market decisions in a duopoly in which one firm is financially constrained and can borrow funds to finance production costs. Two ideas have been separately analyzed in previous work: Some authors argue that debt strategically affects a firm’s output market decisions, typically making it more aggressive; others argue that the threat of bankruptcy makes debt financing costly, typically making a firm less aggressive. Our model integrates both ideas; moreover, unlike most previous work, we derive debt as an optimal contract. Compared with a situation in which both firms are unconstrained, the constrained firm produces less, while its unconstrained rival produces more; prices are higher for both firms. Both firms’ outputs depend on the constrained firm’s internal funds; the relationship is U-shaped for the constrained firm and inversely U-shaped for its unconstrained rival. The unconstrained rival has a higher market share, not because of predation but because of the cost disadvantage of the financially constrained firm. D 2004 Elsevier B.V. All rights reserved.
Missio-logoi and faith: Factors that influence attitude certainty:

One of the goals of missio-logoi used by missionaries (especially missionary speech) is the development of faith in the lives of those whom the missionaries serve. From a biblical perspective, fait...
Rhetoric versus reality: Russian threats to European energy supply

European gas demand will rise from presently 540 billion cubic meters (bcm) to around 800 bcm in 2030. As more than 50 percent of overall European imports originate from Russia, fears have been expressed that the Kremlin could use energy resources as a foreign policy tool. A thorough assessment of domestic consumption, production and investment volumes however reveals that Russian supply will have difficulties in matching growing domestic and European demand. Hence, as the author argues, the threat to European gas supply does not lie in geopolitics, but rather in a lack of investment in the Russian upstream sector. Higher domestic Russian gas prices, enhanced energy efficiency and increases in non-Gazprom production would however make it possible for Russia to meet domestic demand and its export commitments for natural gas.
The Rhetoric and Reality of Regulatory Reform

In January 2007, President George W. Bush stirred up widespread controversy by issuing amendments to an executive order on regulatory review adopted initially by President Clinton. The Bush amendments variously require agencies to issue written regulatory problem statements, assign gate-keeping responsibilities to Regulatory Policy Officers within each agency, and undertake analytic reviews before adopting certain kinds of guidance documents. Both legal scholars and policy advocates charge that the Bush amendments place significant new burdens on administrative agencies and will delay the issuance of important new regulatory policies. This paper challenges the rhetorical claims of obstructionism that have emerged in response to the Bush amendments. It begins by comparing criticisms of the Bush amendments with criticisms of previous regulatory reforms, showing that concerns about delay date all the way back to the creation of the Administrative Procedure Act of 1946. Notwithstanding the perennial nature of charges of delay and obstruction, the U.S. regulatory state has grown dramatically in both size and impact over the last six decades. In addition, the extant social science literature has failed to find any systematic delays associated with the specific procedure affected by the Bush amendments, namely regulatory review by the Office of Management and Budget. Overall, the burdens associated with regulatory reforms appear to be far smaller, or more manageable, than critics usually suppose. This paper concludes with several explanations for persistent reality of regulatory growth in the face of the persistent rhetoric of obstruction. These alternative accounts not only help explain the rhetoric-reality divide over regulatory reform in general, but they also provide reason to expect the Bush amendments will have, at most, only a trivial impact on the overall regulatory process.
Beyond the social contract of consumption: democratic governance in the post-carbon era

Democratic legitimacy in the carbon fuel era has been based on popular acceptance of elitist democracy in return for economic growth and rising material standards of living. This social contract of consumption is coming to an end with climate change adaptation and ecological limits to growth. This article argues that a new era characterized by a social covenant of ecological trusteeship is necessary. Will the politics and governance of this new covenant necessarily be elitist and authoritarian, or can it be democratic in new ways? The article discusses the nature and prospects for a future democratic governance that remains liberal in its respect for human rights and the rule of law, but is more deliberative and civic in its orientation than interest group liberalism has been. Key concepts of ecological literacy and ecological democratic citizenship are discussed. Literacy is understood as a function of both information and empowerment. A model of citizenship as trusteeship is defended against the notion ...
In short supply: Short-sellers and stock returns

Abstract We examine the economic determinants of short-sale supply, and its consequences for future stock returns. Lendable supply increases with expected borrowing costs and decreases with financial statement constructs that indicate overvaluation. Although rising loan fees help ease supply constraints, we find shares are still least available when they are most attractive to short sellers. Using a number of firm characteristics, we derive useful instruments for real-time loan supply and demand conditions in the lending market. Further, we show that (1) when lendable supply is binding (non-binding), short-sale supply (demand) is the main predictor of future stock returns, (2) abnormal returns to the short-side of nine well-known market anomalies are attributable solely to “special” stocks, and (3) loan fees significantly reduce the profitability of the short side and several of these anomalies cease to be profitable. Overall our evidence highlights the central role played by the supply of lendable shares in equity price formation and returns prediction.
Behavioral Science and Consumer Standard Form Contracts

Asymmetric information is a serious threat to the market of consumer standard form contracts. Yet, legislatures, courts, and market-forces do not provide an adequate solution to this threat. This Article argues that a considerable part of this failure is due to the fact that important and relevant social science insights regarding consumers' behavior is widely overlooked. This gap results in the prevalence of unfair or inefficient consumer form contract provisions. More profoundly, it entails that current approaches towards consumer contracts are fundamentally flawed and bound to reach erratic and sometimes unjust conclusions. Cognitive biases and consumers' actual behavioral patterns should have an important role - descriptively and normatively - in the law of consumer contracts. This Article explains how psychological phenomena contribute (i) to consumers' tendency not to read form contracts even when by doing so they fail to maximize their utility; (ii) to consumers' inability to evaluate correctly contract terms once they do read them; and as a result (iii) to sellers' capability of manipulating consumers. The end point of this discussion is twofold: First, it seeks to expand our understanding regarding the inadequacy of current approaches to consumer contracts and the harm that consumers are exposed to when actual behavioral patterns are ignored. Secondly, it provides policy makers with better insights as to the way in which contract law should design the alternative approach to consumer contracts.
Symplectic, Poisson, and contact geometry on scattering manifolds

We introduce scattering-symplectic manifolds, manifolds with a type of minimally degenerate Poisson structure that is not too restrictive so as to have a large class of examples, yet restrictive enough for standard Poisson invariants to be computable. This paper will demonstrate the potential of the scattering symplectic setting. In particular, we construct scattering-symplectic spheres and scattering symplectic gluings between strong convex symplectic fillings of a contact manifold. By giving an explicit computation of the Poisson cohomology of a scattering symplectic manifold, we also introduce a new method of computing Poisson cohomology.
"To Lay and Collect Taxes": The Constitutional Case for Progressive Taxation

This article lays out the constitutional underpinnings of progressive taxation and demonstrates the breadth of government's power to tax. It takes the position that limits on the taxing power must yield to pragmatism and that the Supreme Court, for sound policy reasons, has consistently vindicated an expansive view of the taxing power, a view which easily encompasses vertical equity and, hence, the power to tax progressively. The article responds in part to Calvin Massey's revival of Richard Epstein's suggestion that progressive taxation might violate the Fifth Amendment's Takings clause.
Vertical Federalism, the New States’ Rights, and the Wisdom of Crowds

The framers were concerned that the rights found in the Constitution were mere statements — “parchment barriers” — that would not be enough to protect the people from the abuse of power. Thus, they sought to control power by separating it. This separation of powers within the federal government is not the only method the framers designed to preserve liberty. They also embraced another form of Newtonian mechanics to balance power and thus preserve liberty — what we may call vertical separation — using the states to check the power of the federal government. The states, no less than the three branches on the federal level, protect the liberty of the people by dividing power between the federal and the state governments. Vertical federalism protects our liberties and makes us the envy of the world, first, because the states are an important counterbalance to the federal government. The framers used power to limit power. Second, because when the independent states go their independent ways they implement what the economists call the “wisdom of crowds.”
A Snitch in Time: An Historical Sketch of Black Informing During Slavery

This article sketches the socio-legal creation, use, and regulation of informants in the Black community during slavery and the Black community’s response at that time. Despite potentially creating benefits such as crime control and sentence reduction, some Blacks today are convinced that cooperation with government investigations and prosecutions should be avoided. One factor contributing to this perspective is America’s reliance on Black informants to police and socially control Blacks during slavery, the Civil Rights Movement, and the Wars on Drugs, Crime and Gangs. Notwithstanding this historical justification for non-cooperation, only a few informant law and policy scholars have examined closely the Black community’s relationship with informing. Furthermore, even among this small group of works, noticeably absent are historical explorations of Black America’s experience with informing during slavery. Drawn using a variety of primary and secondary historical and legal sources, this article develops a snapshot of the past revealing many similarities between the Black experience with informing both while enslaved and in contemporary times. Consideration of these resemblances during present debate on the topic may help to facilitate nuanced conversation as to whether and how the modern Black community and government should approach using informants in current times.
Does Information Transparency Decrease Coordination Failure

Abstract We test the effect of information transparency on the probability of coordination failure in games with finite signals. Prior theory has shown that the effect of information transparency is ambiguous. Our study is based on two insights. Where signal space is finite, increased transparency usually destroys uniqueness of equilibria; and increasing transparency can reverse the risk-dominance ordering of equilibria. Our experiments show that increasing transparency improves coordination only when transparency makes the efficient equilibrium risk dominant. Coordination is degraded when increased transparency causes the secure equilibrium to be risk dominant. These results are consistent with subjects holding level-1 beliefs.
The Value of Partial Resource Pooling: Should a Service Network Be Integrated or Product-Focused?

We investigate how dynamic resource substitution in service systems impacts capacity requirements and responsiveness. Inspired by the contrasting network strategies of FedEx and United Parcel Service (UPS), we study when two service classes (e.g., express or regular) should be served by dedicated resources (e.g., air or ground) or by an integrated network (e.g., air also serves regular). Using call center terminology, the question is whether to operate two independent queues or one N-network. We present analytic expressions for the delay distributions and the value of network integration through partial resource pooling. These show how the value of network integration depends on service quality (speed and reliability of service) and demand characteristics (volume averages and covariance matrix). Our results suggest that network integration is of little value and operating dedicated networks is a fine strategy if the firm primarily serves express requests with high reliability and if the correlation with regular requests is not strongly negative. In contrast, network integration offers significant gains for firms serving primarily regular requests, almost independent of correlation. Our analysis provides the intuition behind these findings in terms of three main drivers of integration value: arrival pooling, the substitution effect, and the correlation effect.
Signaling smarts? Revealed preferences for self and social perceptions of intelligence

Abstract We design a laboratory experiment to test for image motives in a setting where decisions signal intelligence to a social audience. Money-maximizing behavior in the experiment sorts subjects by academic ability, as measured by performance on verbal analogy questions, across two levels of question difficulty. Sorting behavior is publicly revealed in our “audience” treatment, facilitating social signaling. In the “intrinsic only” treatment, the signaling mechanism was explained but decisions were kept private. In the control, there was no discussion of the signaling mechanism and all decisions were private. We find that intrinsic only subjects were significantly more likely to choose the high-type action than the control. In comparison, subjects were significantly less likely to choose the signal in the audience treatment, when doing so was publicly observed. The effects are more pronounced in males. The results suggest that social observation can demotivate individuals when decisions signal intelligence, despite evidence that the underlying trait was privately considered desirable. Audience effects have a less predictable impact on behavior in this setting as compared to the near universally positive findings from the altruism and trust literature. Our experimental design can be easily adapted to study image motives in a broad set of environments using revealed preferences.
Duration of Residence in the Rental Housing Market

This paper estimates a proportional hazard model of duration of residence in rental housing over 1987–1998 based on a unique dataset from the BLS-CPI housing sample together with American Housing Survey and other metropolitan economic data. The paper employs an innovative semi-parametric estimation approach for group duration analysis of the proportional hazard model. Results of the analysis indicate that the duration of residence in rental housing varies significantly across individual units and market segments, and is effected by tenant, dwelling, and market characteristics. An improved understanding of duration of residence offers new insights as regards fluctuations in tenant turnover, building occupancy, and rent flows, as well as new confidence in pro forma assumptions critical to rental housing development.
If OSHA is So Bad, Why is Compliance So Good?

Since its inception more than twenty years ago, the Occupational Safety and Health Administration (OSHA) has been the subject of an intense public debate on its effectiveness. This article analyzes the determinants of establishment-level compliance with specific safety and health standards as a means of assessing the agency's effectiveness. The empirical results suggest that OSHA has had large impacts on business compliance behavior, despite its low regulatory profile. These results indicate that government regulatory agencies can substantially change private-sector behavior, even given limited regulatory resources.
Resource Allocation via Graph Neural Networks in Free Space Optical Fronthaul Networks

This paper investigates the optimal resource allocation in free space optical (FSO) fronthaul networks. The optimal allocation maximizes an average weighted sum-capacity subject to power limitation and data congestion constraints. Both adaptive power assignment and node selection are considered based on the instantaneous channel state information (CSI) of the links. By parameterizing the resource allocation policy, we formulate the problem as an unsupervised statistical learning problem. We consider the graph neural network (GNN) for the policy parameterization to exploit the FSO network structure with small-scale training parameters. The GNN is shown to retain the permutation equivariance that matches with the permutation equivariance of resource allocation policy in networks. The primal-dual learning algorithm is developed to train the GNN in a model-free manner, where the knowledge of system models is not required. Numerical simulations present the strong performance of the GNN relative to a baseline policy with equal power assignment and random node selection.
LEARNING DYNAMICS AND NONLINEAR MISSPECIFICATION IN AN ARTIFICIAL FINANCIAL MARKET

In this paper, we explore the consequence of learning to forecast in a very simple environment. Agents have bounded memory and incorrectly believe that there is nonlinear structure underlying the aggregate time series dynamics. Under social learning with finite memory, agents may be unable to learn the true structure of the economy and rather may chase spurious trends, destabilizing the actual aggregate dynamics. We explore the degree to which agents' forecasts are drawn toward a minimal state variable learning equilibrium as well as a weaker long-run consistency condition.
Constructing "proper" ROCs from ordinal response data using weighted power functions.

Background. Receiver operating characteristic (ROC) analysis is the standard method for describing the accuracy of diagnostic systems where the decision task involves distinguishing between 2 mutually exclusive possibilities. The popular binormal curve-fitting model usually produces ROCs that are improper in that they do not have the ever-decreasing slope required by signal detection theory. Not infrequently, binormal ROCs have visible hooks that falsely imply worse-than-chance diagnostic differentiation where the curve lies below the no-information diagonal. In this article, we present and evaluate a 2-parameter, weighted power function (WPF) model that always results in a proper ROC curve with a positive, monotonically decreasing slope. Methods. We used a computer simulation study to compare results from binormal and WPF models. Results. The WPF model produces ROC curves that are less biased and closer to the true values than are curves obtained using the binormal model. The better performance of the WP...
Interfacility Interaction in Models of Hub and Spoke Networks

Providers of transportation services may reduce their average unit costs by bundling flows and channeling them between hubs (also known as concentrators or routers). The resulting facility locations are interdependent because of the flows between them. This paper analyzes mathematical models of hub systems in an effort to enhance understanding of the optimal location of interactive facilities. The paper examines the behavior of solutions to several alternative models that require the location of a hub at either of two similar locations. A model employing a concave cost function favors the assembly of flows, penalizes fractional facility locations, and produces local minima that have integer facilities.
Grey nuances in the black and white debate over subsidized Internet access

• Zero rating/Sponsored data plans exempt specific content from metering or provide free access to limited content..
Nonlinear Pricing of Information Goods

This paper analyzes optimal pricing for information goods under incomplete information, when both unlimited-usage (fixed-fee) pricing and usage-based pricing are feasible and administering usage-based pricing may involve transaction costs. It is shown that offering fixed-fee pricing in addition to a nonlinear usage-based pricing scheme is always profit improving in the presence of nonzero transaction costs, and there may be markets in which a pure fixed-fee is optimal. This implies that the optimal pricing strategy for information goods is almost never fully revealing. Moreover, it is proved that the optimal usage-based pricing schedule is independent of the value of the fixed fee, a result that simplifies the simultaneous design of pricing schedules considerably and provides a simple procedure for determining the optimal combination of fixed-fee and nonlinear usage-based pricing. The introduction of fixed-fee pricing is shown to increase both consumer surplus and total surplus. The differential effects of setup costs, fixed transaction costs, and variable transaction costs on pricing policy are described. These results suggest a number of managerial guidelines for designing pricing schedules. For instance, in nascent information markets, firms may profit from low fixed-fee penetration pricing, but as these markets mature, the optimal pricing mix should expand to include a wider range of usage-based pricing options. Minimum fees, quantity discounts, and adoption levels across the different pricing schemes are characterized, strategic pricing responses to changes in market characteristics are described, and the implications of the paper's results for bundling and vertical differentiation of information goods are discussed.
Retirees at risk: the precarious promise of post-employment health benefits.

This article examines the increasingly troubled state of employer-provided health benefits for retirees. The availability of such benefits is a major determinant of both the timing of retirement and the financial security of those who retire. Despite the signal importance of these benefits to current and prospective retirees, employers have been steadily eroding their value and in many cases, eliminating these benefits outright. Such actions are often catastrophic for the retirees affected, especially if they are not yet eligible for Medicare. This article begins by explaining the economic pressures that have precipitated this unfortunate development, including the increasing cost of health care generally. But much of the decline in retiree health benefits is attributable to financial accounting requirements that required employers to disclose the projected costs of these benefits. These accounting requirements have recently been extended to state and local government employers, and another wave of broken promises may lie just ahead. The article next examines the extensive litigation regarding the erosion and/or termination of retiree health benefits, focusing on the Employee Retirement Income Security Act (ERISA). Claims that retirees have 'vested' rights to such benefits are analyzed in both the unionized and nonunionized employment contexts, as well as claims of breach of fiduciary duty and estoppel. In short, ERISA has largely failed to protect the reasonable expectations of retirees concerning their post-employment health benefits. The article then turns to alternative approaches that retirees might consider, including continuation coverage from their former employer, individually obtained health insurance, and health savings accounts. Finding serious problems with each of these approaches, the article considers recent legislative proposals to extend Medicare to early retirees, noting the impact of such an extension on existing employer health benefit programs for retirees and on individuals’ retirement timing decisions.
Criminal Law Scholarship: Three Illusions

T he paper criticizes criminal law scholarship for helping to construct and failing to expose analytic structures that falsely claim a higher level of rationality and coherence than current criminal law theory deserves. It offers illustrations of three such illusions of rationality. First, it is common in criminal law discourse for scholars and judges to cite any of the standard litany of "the purposes of punishment" -- just deserts, deterrence, incapacitation of the dangerous, rehabilitation, and sometimes other purposes -- as a justification for one or another liability rule or sentencing practice. The cited "purpose" gives the rules an aura of rationality, but one that is, in large part, illusory. Without a principle defining the interrelation of the "purposes," nearly any rule can be justified by some "purpose of punishment." Thus, a decision maker can switch among distributive principles as needed to provide an apparent rationale for whichever rule the person prefers, even if that preference is not based on rational criteria. A second example is found in a central mechanism for determining an offenderâs blameworthiness: the use of an individualized objective standard. The widely used mechanism avoids the problems acknowledged to attend a strictly objective standard. A person's situation and capacities are central to an assessment of whether a person can be fairly blamed for a violation, and the individualized objective standard allows the decision maker to take these into account. At the same time, the mechanism avoids reversion to a completely subjective standard, which might exempt many blameworthy cases from liability. In reality, however, the mechanism only shifts the form of the problem. Codes that use the individualized objective standard fail to provide a principle by which one can determine those characteristics of an offender with which the objective standard ought to be individualized and those with which it ought not. Without a governing principle, the issue again is left to the discretion of decision makers, with no guidance as to how that discretion is to be exercised. A final illusion obscures whether the criminal justice system is, in fact, in the business of "doing justice." The "criminal justice" system imposes "punishment" and encourages moral condemnation of those found "guilty" of "crimes." But while the system cultivates its doing-justice image, it increasingly shifts to a system of essentially preventive detention, where a violator's sanction is derived more from what is needed to incapacitate him from committing future offenses than to punish him for a past offense. There are great advantages to the deception, but also serious costs and inefficiencies. The paper discusses why some illusions are more objectionable than others and what the existence of such illusions says about modern criminal law scholarship.
Private Investment and the Institutionalization of Collective Action in Autocracies: Ruling Parties and Legislatures

Despite the absence of formal institutions to constrain opportunistic behavior, some autocracies successfully attract private investment. Prior work explains such success by the relative size of the autocrat’s winning coalition or the existence of legislatures. We advance on this understanding by focusing on the key constraint limiting coalition size and legislative efficacy: organizational arrangements that allow group members to act collectively against the ruler. We introduce three new quantitative measures of the ability of ruling party members to act collectively: ruling-party institutionalization, the regularity of leader entry, and the competitiveness of legislative elections. These characteristics are robustly associated with higher investment. Our evidence also points to an effect on the risk of expropriation in nondemocracies.
The myth of the disappearing business bankruptcy

Introduction 3 I. Origins of the Undercount 7 A. The Administrative Office Data 7 1. The Apparent Decline in Business Bankruptcies as a Percentage of All Filings 8 2. Comparing the Administrative Office Data to Other Sources 11 a. The Dun & Bradstreet Statistics 12 b. The Small Business Administration Statistics 13 3. Summary 15 B. How the Administraive Office Collects Its Data 15 1. The Origins of the Business/Nonbusiness Distinction 16 2. The Midto Late 1980s and the Unofficial Cover Sheet ....... 17 3. The Official Cover Sheet, 1991 to the Present 20 4. Who Completed the Cover Sheet 21 C. The Role of Automated Form Software 22 II. Our Study 26 A. Methodology 27 B. Our Count 29 1. Rates of Self-Employment 30 2. Reconciling the Different Counts of Self-Employment ......... 32
The complicated constituency: a study of immigrant opinions about political representation

Non-naturalized immigrants cannot vote in the United States, but they are included in apportionment and elected officials craft policies that affect them. Representatives are thus, according to many scholars, obligated to represent their needs and interests. The question this study investigates is how immigrants feel about representative democracy in the United States. To what extent is their perspective on American-style representation shaped by their status as immigrants or ethnic minorities? Or are their assessments and the reasons for them similar to those of whites and citizens (i.e. that “special interests” dominate politics)? This study examines these questions through focus group discussions with Latino immigrants and with non-Hispanic native-born whites. Results highlight similarities in attitudes about representation among both groups but also areas in which immigrants are more pessimistic and even optimistic. Results also show that immigration is central to the participants' social identity whe...
Learning from Customers: Individual and Organizational Effects in Outsourced Radiological Services

The ongoing fragmentation of work has resulted in a narrowing of tasks into smaller pieces that can be sent outside the organization and, in many instances, around the world. This trend is shifting the boundaries of organizations and leading to increased outsourcing. Though the consolidation of volume may lead to productivity improvement, little is known about how this shift toward outsourcing influences learning by providers of outsourced services. When producing output, the content of the knowledge gained can vary from one unit to the next. One dimension along which output can vary—a dimension with particular relevance in outsourcing—is the end customer for whom it is produced. The performance benefits of such customer experience remain largely unexamined. We explore this dimension of volume-based learning in a setting where doctors at an outsourcing firm complete radiological reads for hospital customers. We examine more than 2.7 million cases read by 97 radiologists for 1,431 customers and find evidence supporting the benefits of customer-specific experience accumulated by individual radiologists. Additionally, we find that variety in an individual’s customer experience may increase the rate of individual learning from customer-specific experience for a focal task. Finally, we find that the level of experience with a customer for the entire outsourcing firm also yields learning and that the degree of customer depth moderates the impact of customer-specific experience at the individual level. We discuss the implications of our results for the study of learning as well as for providers and consumers of outsourced services.
Are small investors naive about incentives

Abstract Security analysts tend to bias stock recommendations upward, particularly if they are affiliated with the underwriter. We analyze how investors account for such distortions. Using the NYSE Trades and Quotations database, we find that large traders adjust their trading response downward. While they exert buy pressure following strong buy recommendations, they display no reaction to buy recommendations and selling pressure following hold recommendations. This “discounting” is even more pronounced when the analyst is affiliated with the underwriter. Small traders, instead, follow recommendations literally. They exert positive pressure following both buy and strong buy recommendations and zero pressure following hold recommendations. We discuss possible explanations for the differences in trading response, including information costs and investor naivete.
A theory of risk disclosure

In this paper, we consider the price effects of risk disclosure. We develop a model in which investors are uncertain about the variance of a firm’s cash flows and the firm releases an imperfect signal regarding this variance. In our model, uncertainty over the riskiness of a firm’s cash flows leads to a variance uncertainty premium in its price. We demonstrate that risk disclosure decreases the firm’s cost of capital by reducing this premium and that the market response to risk disclosure is small when the expected level of risk is high. Moreover, we find that firms acquire and disclose more risk information when their cash flow risk is greater than expected. Finally, we demonstrate that in a multi-asset setting, only risk disclosure concerning systematic risks will impact the cost of capital.
Determinants of corporate borrowing: A behavioral perspective

Abstract This article integrates an earnings-based capital structure model into a simple real options framework to analyze the effects of managerial optimism and overconfidence on the interaction between financing and investment decisions. Several empirical implications follow from solving the model. Notably, my analysis reveals that managerial traits can ameliorate bondholder–shareholder conflicts, such as the debt overhang problem. While debt delays investment inefficiently, mildly biased managers can overcome this problem, even though they tend to issue more debt. Similar properties and results are discussed for other real options, such as the asset stripping or risk-shifting problems.
The Demise of the Mutual Organizational Form: An Investigation of the Life Insurance Industry

We investigate the role of organizational structure in financial services markets by examining the U.S. life insurance industry. Traditionally, stock and mutual life insurers were equally represented, but now the industry is mainly composed of stock firms. We find operational efficiency, access to capital, and tax savings are important determinants for this shift. The incentive to demutualize differs by the type of conversion: full demutualization is chosen for efficiency and access to capital reasons and partial conversion, using a mutual holding company, is chosen for tax savings. Firm operational efficiency improves after conversion. We also find the efficiency of the stock organizational form dominates that of the mutual structure during our sample period, 1995 to 2004.
Ownership without Citizenship: The Creation of Noncitizen Property Rights

At the nation’s founding, the common law of property defined ownership as an incident of citizenship. Noncitizens were unable lawfully to hold, devise or inherit property. This doctrine eroded during the course of the eighteenth and nineteenth centuries, but few scholars have examined its demise or the concommittant rise of property rights for foreigners. This article is the first sustained treatment of the creation of property rights for noncitizens in American law. It uncovers two key sources for the rights that emerged during the nineteenth century: federal territorial law, which allowed for alien property ownership and alien suffrage; and state constitutions, a significant number of which included property rights for noncitizens. Iowa, Wisconsin, California, and Michigan led the way, including these rights in their state constitutions prior to the Civil War. Through close examination of Congressional debates, records of state constitutional conventions, and other historical texts, this article places this significant legal reform in a broader historical context. Lawmakers succeded in untethering notions of citizenship from notions of ownership, creating a more expansive vision of membership in the American polity. Property law was itself a form of immigration law, used not to expel migrants but rather to attract them and, lawmakers hoped, eventually to assimilate them as new Americans. The property reforms discussed here did not, however, result in property rights for all noncitizens; in fact, a majority of states today have some form of property restriction based on alienage. This article suggests that an answer for the persistance of noncitizen property restrictions in American law lies in the nineteenth-century. Reform efforts in this era held the seeds of restrictive policies that would develop later in the twentieth and twenty-first centuries, such as anti-Asian land laws and anti-illegal immigrant housing ordinances. Sources from the ninteenth-century reveal that becoming “American” through property ownership was not a fully inclusive process; from the outset it was limited by assumptions about national origin, race and territorial location.
Sequencing Organizational Change For Post-Shock Adaptation: A Simulation Model

What should an organization do after an environmental shock? What is the best sequence for changing organizational features or activities in response to a shock? In this study, a simulation methodology is used to examine how different sequences in changes to strategy, structure, and resource allocation affect the success of the adaptation process. Results show that the choice of change sequence leads to varying outcomes in organizational maneuverability, competence, and effectiveness. However, no one sequence is optimal for all scenarios; the best sequence choice depends on the goals of the change process as well as the content and direction of change. After an environmental shock, an organization should analyze and determine which sequence of change to follow. However, if there is little time for analysis, a reasonable heuristic is to implement a change in strategy first.
Dynamics of fiscal financing in the United States

Abstract General equilibrium models that include policy rules for government spending, lump-sum transfers, and distortionary taxation on labor and capital income and on consumption expenditures are fit to US data under rich specifications of fiscal policy rules to obtain several results. First, the best-fitting model allows many fiscal instruments to respond to debt. Second, responses of aggregates to fiscal policy shocks under rich rules vary considerably from responses where only non-distortionary fiscal instruments finance debt. Third, in the short run, all fiscal instruments except labor taxes react strongly to debt, but long-run intertemporal financing comes from all components of the government’s budget constraint. Fourth, debt-financed fiscal shocks trigger long-lasting dynamics; short-run and long-run multipliers can differ markedly.
The Monroe Mystery Solved: Beyond the "Unhappy History" Theory of Civil Rights Litigation

This argument of this paper is that the alleged explosion of civil rights litigation following the case of Monroe v. Pape is less attributable to any major change effected by that case than to the paucity of litigable constitutional rights before the 1960s. The author shows that Warren Court cases of the 1960s coming after Monroe, particularly cases under the Fourth and Fifth Amendments, not only incorporated these rights as against the states, not only recognized these rights as constitutional defenses to features of the criminal justice process, not only gave substance to these defenses by establishing exclusionary rules for their violation, but more importantly converted these defenses into litigable claims. It was this development that is forershadowed in Monroe, and that produced the flowering of civil rights actions for damages in the Warren and Burger Courts.
Women, Medical Care, and Mass Tort Litigation

In this Essay, I focus attention on and raise some questions about the treatment of women by three power centers: the corporate businesses that provide medical products to women, the regulatory governmental structures that exist to protect consumers from hazardous drugs and medical devices, and the adjudicatory legal system that exists to apply legislative and common law norms to redress the grievances of people injured by drugs and medical devices.The Essay notes the striking amount of harm that is done to women by the businesses that provide medical products to women, and asks how conditions might be changed to prevent or deter those wrongs and to better redress the injuries that occur nonetheless. It also explores whether the legal system – including the regulatory system – is significantly different from the corporate culture that permits so many injuries to women, or whether the legal system is similarly infected by cultural influences that render unequal the protection that women are afforded by regulatory agencies and by the courts.
Industrial targeting, experimentation and long-run specialization

Abstract This paper emphasizes the experimental nature of industrial targeting policies under uncertainty in a small open economy. A government promotes entry of new firms in selected industries and updates its beliefs about the country's comparative advantage in a Bayesian way. This selective targeting policy is analyzed in the framework of a special type of statistical decision problem known as the multi-armed bandit. The paper analyzes how the costs and benefits of learning about a country's comparative advantage depend on the characteristics of the targeted industries. The framework suggests that even an optimally designed industrial targeting policy may eventually steer the country away from specializing according to its true comparative advantage.
Testing the relative power of accounting standards versus incentives and other institutional features to influence the outcome of financial reporting in an international setting

Abstract Ball, Robin and Wu (Journal of Accounting and Economics, 2003, this issue) investigate the relationship between accounting standards and the structure of other institutions on the attributes of the financial reporting system. They find evidence consistent with the hypothesis that beyond accounting standards, the structure of other institutions, such as incentives of preparers and auditors, enforcement mechanisms and ownership structure affects the outcome of the financial reporting system. However, interpretation of the evidence with respect to the notion of quality of the financial reporting system and the quality of accounting standards that the authors introduce is problematic.
American Options in Regime-Switching Models

The pricing problem for American options in Markov-modulated Levy models is solved. The early exercise boundaries and prices are calculated using a generalization of Carr's randomization procedure for regime-switching models. The pricing procedure is efficient even if the number of states is large, provided the transition rates are not large w.r.t. the riskless rates. The payoffs and riskless rates may depend on a state. Special cases are stochastic volatility models and models with stochastic interest rate; both must be modeled as finite-state Markov chains.
Winners in the spotlight: Media coverage of fund holdings as a driver of flows $

Abstract We show that media coverage of mutual fund holdings affects how investors allocate money across funds. Fund holdings with high past returns attract extra flows, but only if these stocks were recently featured in the media. In contrast, holdings that were not covered in major newspapers do not affect flows. We present evidence that media coverage tends to contribute to investors׳ chasing of past returns rather than facilitate the processing of useful information in fund portfolios. Our evidence suggests that media coverage can exacerbate investor biases and that it is the primary mechanism that makes fund window dressing effective.
Interaction between Accounting Standards and Monetary Policy: The Effect of SFAS 115

ABSTRACT: I examine the effect of marketable security holdings on monetary policy when those securities are classified under SFAS 115. Prior research has shown that loan growth is negatively related to monetary contractions, and that marketable security holdings mitigate that negative relationship. Those studies consider the securities in aggregate; I am the first to consider the securities classification in conjunction with monetary policy. I ask whether held-to-maturity securities, relative to non-held-to-maturity securities, are negatively related to loan growth. I find that the held-to-maturity securities are more negatively related to loan growth, relative to non-held-to-maturity securities. I also find that held-to-maturity securities are incrementally more negatively related to loan growth during monetary tightening, relative to non-tightening times. Finally, I find that both of these effects are stronger for small banks, relative to large banks. Given the findings, I conclude that held-to-maturit...