cssi/SciSciGPT-SciSciNet huggingface dataset:
Information acquisition and innovation under competitive pressure

This paper studies information acquisition under competitive pressure and proposes a model to examine the relationship between product market competition and the level of innovative activity in an industry. Our paper offers theoretical support for recent empirical results that point to an inverted-U shape relationship between competition and innovation. The model presents an optimal timing decision problem where a firm endowed with an idea trades the benefits of waiting for additional information on whether this idea can be converted into a successful project against the cost of delaying innovation: a given firm's profit following innovation is decreasing in the number of firms that invested at earlier dates. By recognizing that a firm can intensify its innovative activity on two dimensions, a risk dimension and a quantitative dimension, we show that firms solve this trade-off precisely so as to generate the inverted-U shape relationship. The dynamic setup of our model offers insights not just in the cross-section on the relationship between competition and innovation, but also intertemporally on the optimal timing of innovation at firm level.
The anomalous behavior of the S&P covered call closed end fund

This article examines the anomalous behavior of the S&P Covered Call Closed End (BEP) Fund, which traded in 2007 at substantial premiums to its net asset value, which reached 23 per cent. The large premium is striking in light of the highly transparent and easy to replicate strategy of the fund, which involves rolling over one-month, at-the-money S&P 500 index covered calls. The article finds that the large premium was a result of BEP returns overreacting to positive S&P returns, adjusted for the deltas and gammas of the options that the fund was short. Another possible explanation for the emergence of the large premium was the near doubling of the VIX from very low and stable levels, which may have encouraged unsophisticated investors to buy the BEP fund at increasingly elevated premiums. The article then examines the anomaly from the perspective of the noise trader literature and finds that during the period of high premiums the volatility of BEP returns was not unusually high relative to the volatility of the underlying fundamentals, and that large premiums did not emerge at other covered call closed end funds. The evidence also indicates that short positions grew substantially during this period, which suggests that short covering may have been a factor behind the surge of the premium.
Making up history: A comment on Pratten

Stephen Pratten's critique of mathematical formalism in the discipline of economics does not provide an adequate definition of formalism and his use of the term bears little resemblance to common mathematical usage. Furthermore, Pratten abuses the history of economics by inventing an imaginary tradition of opposition to formalism among Cambridge economists.
Debt Market Liquidity and Corporate Default Prediction

Recent research on the subprime crisis and rollover risk suggests that debt market liquidity is a major factor affecting the risk of default. This implies that firms that rely heavily on short-term debt, such as commercial paper (CP), are at greater risk of default. Debt market illiquidity could reduce the value of the firm and thus impact the firm's leverage, which is a major factor in predicting default. We estimate the effect of debt market conditions on the probability of default with a discrete-time dynamic hazard model that takes into account measurement error in firm leverage. Our results indicate that rollover risk is a significant factor in causing default, but the risk was higher for nonfinancial firms around 2000–2001 and considerably less entering the subprime crisis.
Do VCs use inside rounds to dilute founders? Some evidence from Silicon Valley

Abstract In the bank-borrower setting, a firm's existing lender may exploit its positional advantage to extract rents from the firm in subsequent financings. Analogously, a startup's existing venture capital investors (VCs) may dilute the founder through a follow-on financing from these same VCs (an “inside” round) at an artificially low valuation. Using a hand-collected dataset of Silicon Valley startup firms, we find little evidence that VCs use inside rounds to dilute founders. Instead, our findings suggest that inside rounds are generally used as “backstop financing” for startups that cannot attract new money, and these rounds are conducted at relatively high valuations (perhaps to reduce litigation risk).
Crowdsourcing, attention and productivity

We show through an analysis of a massive data set from YouTube that the productivity exhibited in crowdsourcing exhibits a strong positive dependence on attention, measured by the number of downloads. Conversely, a lack of attention leads to a decrease in the number of videos uploaded and the consequent drop in productivity, which in many cases asymptotes to no uploads whatsoever. Moreover, short-term contributors compare their performance to the average contributor's performance while long-term contributors compare it to their own media.
The Case for an International Court of Civil Justice

When multinational corporations cause mass harms to lives, livelihoods, and the environment in developing countries, it is nearly impossible for victims to find a court that can and will issue an enforceable judgment. In this work, Professor Maya Steinitz presents a detailed rationale for the creation of an International Court of Civil Justice (ICCJ) to hear such transnational mass tort cases. The world's legal systems were not designed to solve these kinds of complex transnational disputes, and the absence of mechanisms to ensure coordination means that victims try, but fail, to find justice in country after country, court after court. The Case for an International Court of Civil Justice explains how an ICCJ would provide victims with access to justice and corporate defendants with a non-corrupt forum and an end to the cost and uncertainty of unending litigation - more efficiently resolving the most complicated types of civil litigation.
The long-term effects of American Indian boarding schools

Abstract This paper explores some long-standing questions of the legacy of American Indian boarding schools by comparing contemporary Indian reservations that experienced differing impacts in the past from boarding schools. Combining recent reservation-level census data and school enrollment data from 1911 to 1932, I find that reservations that sent a larger share of students to off-reservation boarding schools have higher high school graduation rates, higher per capita income, lower poverty rates, a greater proportion of exclusively English speakers, and smaller family sizes. These results are supported when distance to the nearest off-reservation boarding school that subsequently closed is used as an instrument for the proportion of past boarding school students. I conclude with a discussion of the possible reasons for this link.
A Tale of Two Externalities: Environmental Policy and Market Structure

This paper examines the two externalities that a country's environmental regulation imposes on other country's welfare: an environmental externality, due to transboundary pollution, and a competitive advantage externality, as regulations affect domestic firms' abatement costs, which impact the profits of their foreign competitors. We first analyze the emission standards that countries independently set under different market structures and then compare them with the standards set under international environmental agreements that internalize one or both types of externalities. The paper hence disentangles the effect of each externality. We show that firms’ profits increase when countries participate in international treaties if the environmental damage from pollution is relatively low and such pollution is not significantly transboundary. We hence demonstrate that international environmental agreements can serve as cooperative devices firms use to ameliorate overproduction and increase profits, without the need to form collusive agreements.
Cybersecurity and Executive Power

This Article analyzes the constitutional authority of the President to shut down or limit public access to the Internet in a time of national emergency. The threats posed by cybercrime, cyberwarfare, and cyberterrorism are significant. It is imperative that national governments and international policymakers develop defenses and contingency plans for such attacks. At the same time, the threats to civil liberties posed by current legislative cybersecurity proposals are equally real. Executive power to disrupt Internet access in the name of security can become as potent a weapon against democracy as a hacker’s attempt to take down the power grid. This Article examines current cybersecurity proposals in Congress and explains why they are in many ways misguided. It then examines the constitutional law of presidential power against the backdrop of recent efforts by Congress and the Executive to regulate cyberspace. The Article concludes with a proposed cybersecurity policy matrix, which could help courts and policymakers manage the difficult constitutional and policy tensions raised by the problem of cybersecurity.
Interpreting Tests of the Convergence Hypothesis

This paper provides a framework for understanding the cross-section and time series approaches which have been used to test the convergence hypothesis. First, we present two definitions of convergence which capture the implications of the neo-classical growth model for the relationship between current and future cross-country output differences. Second, we identify how the cross-section and time series approaches relate to these definitions. Cross-section tests are shown to be associated with a weaker notion of convergence than time series tests. Third, we show how these alternative approaches make different assumptions on whether the data are well characterized by a limiting distribution. As a result, the choice of an appropriate testing framework is shown to depend on both the specific null and alternative hypotheses under consideration as well as on the initial conditions characterizing the data being studied.
Beyond the crisis: revisiting emerging Europe's growth model

Focusing on the nexus between economic growth and the buildup of external vulnerabilities, this paper provides a systematic account of different growth strategies followed in Central and Eastern Europe in 2000-08 and then uses this growth diagnostics to derive implications for a post-crisis recovery. The main findings point to three policy lessons for improving growth sustainability. First, greater reliance on tradable sectors should be the cornerstone of a future growth model. Second, enhancing domestic sources of bank credit funding would contribute to the mitigation of external vulnerabilities and make the domestic financial system more resilient to global financial shocks. Third, prudential and macroeconomic policies will have to be more proactive in managing capital inflows, including funneling these inflows into investment in export-oriented industries.
Collective and Individual Approaches to Protecting Employee Privacy: The Experience with Workplace Drug Testing

This contribution to a symposium on workplace privacy asks what difference it makes to think about workers' rights under a collective as opposed to an individual rights model in a particular context: that of protecting employee privacy. More specifically, it undertakes an examination of the range of disputes between employers and employees over workplace drug testing in the late 1980's and the 1990's, focusing on the differences between cases brought with union involvement and those brought by individual workers acting alone. In doing so, it asks how collective forms of disputing about drug testing differed from individual approaches, and whether these differences affected the ability of workers to assert and protect their interests in personal privacy. What this examination suggests is that unions were far more likely than individual litigants to bring broad-based challenges intended to benefit the workforce as a whole; however, their ability and willingness to do so appeared to depend heavily on both the legal and the bargaining environment. Over time, union-initiated challenges increasingly focused on the application of drug testing policies to particular workers rather than class-wide challenges. Union involvement also influenced how these challenges were framed in legal terms. Disputes channeled through the collective bargaining system emphasized workers' interests in job security, while an individual rights approach more often framed the issue in dignitary terms, alleging claims such as invasion of privacy, defamation or intentional infliction of emotional distress. And although individual litigants occasionally obtained damage awards, they primarily brought after-the-fact challenges to the implementation of drug testing policies rather than seeking prospective, class-wide relief. This exploration suggests that individual privacy rights are not mere substitutes for collective mechanisms that aggregate worker interests. However, deciding how collective and individual rights should be coordinated raises difficult questions requiring further study, including more empirical work to better understand the tradeoffs involved.
Chance-Constrained Surgery Planning Under Conditions of Limited and Ambiguous Data

Surgery planning decisions include which operating rooms (ORs) to open, allocation of surgeries to ORs, sequence, and time to start each surgery. They are often made under uncertain surgery duratio...
CAPITAL FLOWS AND JAPANESE ASSET VOLATILITY

Characterizing asset price volatility is an important goal for financial economists. The literature has shown that variables that proxy for the information arrival process can help explain and/or forecast volatility. Unfortunately, however, obtaining good measures of volume and/or order flow is expensive or difficult in decentralized markets such as foreign exchange. We investigate the extent that Japanese capital flows, which are released weekly, reflect information arrival that improves foreign exchange and equity volatility forecasts. We find that capital flows can help explain transitory shocks to generalized autoregressive conditionally heteroskedastic volatility.
North-South Technological Diffusion: A New Case for Dynamic Gains from Trade

The transitional dynamics for both a developed and a less developed country are derived when North-South trade leads to technological diffusion through reverse engineering of intermediate goods in a quality ladder model of endogenous growth. Domestic technological progress occurs via innovation or imitation, while growth is driven by technological advances in the quality of domestically available inputs, regardless of country of origin. The concept of learning-to-learn is incorporated into both imitative and innovative processes. International trade with imitation leads to feedback effects between Southern imitators and Northern innovators who compete for the world market. Hence, both countries face transition paths dependent on the relative technologies in the two countries. For reasonable parameter values, the rates of innovation and imitation are both falling in transition to steady-state and yet remain above that under autarky. Increased interaction between the North and the South, through increased openness to imports of Northern intermediate goods, leads to higher world growth, demonstrating dynamic benefits to the South of increased trade with a more developed country. The transition to steady-state in which the rate of innovation in the developed country falls as the developing country reduces the technology gap between the two countries may explain the apparent recent slowdown of total factor productivity growth in OECD countries over the last 30 years.
Passé Media: Communication and Transportation on Commuter and Computer Buses

This essay proposes the concept of “passe media” as a contribution to scholarship that combines communication and geography, as well as to work that foregrounds background processes of networked, digitized social production. Passe media, communication and transportation technologies that both connect endpoints and are acclaimed only until the next technology arrives, reveal at least three attributes: (1) a novel way to conceptualize mobility, (2) the transformation of use-value to exchange-value, and (3) the continued ecological imprints of digital technologies. To illustrate, we turn to the bus, deployed both for transportation (commuter buses) and communication (computer buses). We argue that the moment of the bus highlights the ways in which spaces of connection are simultaneously privileged and ignored, highlighted and effaced
Invisible Settlements, Invisible Discrimination

Invisible settlements make discrimination in the workplace invisible. Now the norm in employment discrimination litigation, these settlements resolve actions through private contractual agreements with confidentiality clauses that prohibit the plaintiff and her attorney from revealing not only the payment amount, but even the existence of and the facts surrounding the underlying claim. The court record indicates only that the action was dismissed by stipulation, for which no judicial approval is required. Successful outcomes for discrimination victims are shielded from judicial and public attention, lending credence to claims that discrimination in the workplace largely has been eradicated. Invisibility defeats the intent of the discrimination statutes, skews empirical studies of discrimination litigation, which inform the public debate about the prevalence of bias, and hampers lawyers' ability to counsel and negotiate on behalf of discrimination claimants. The roots of invisibility can be traced to an increasingly privatized model of statutory enforcement, which ignores the deterrence function of public resolutions. Increased transparency could be achieved by any of the following means. First, the EEOC, which requires a public record of settlements in litigation that it brings, could follow the lead of the United States Department of Labor, which by regulation insists on agency or judicial approval of settlements under the worker protection statutes that it administers. Second, the civil rights bar could take a stand against secrecy, as the personal injury bar has done, and gain agreement from clients in advance to reject settlements that require confidentiality. Finally, at the very least, the courts could require submission of the specific terms of stipulated dismissals, without party identification, so that aggregate data about the nature and extent of settlements in civil rights litigation could be publicly available.
The Biological Causes and Consequences of Homosexual Behavior and Their Relevance for Family Law and Policies

What we do not know about the causes of homosexual attraction seems to exceed what we do know; but we have abundant and increasing knowledge about the consequences and effects of homosexual behavior. This paper explores briefly both of those subjects with emphasis upon the effects and outcomes of homosexual behavior that should be very relevant to family law. The evidence that homosexual attraction is immutable (comparable to race, for example) has many gaps and is very unsettled; and even if established it would not necessarily justify the claim for legalizing same-sex marriage. There is substantial evidence that homosexual behavior is associated with significant personal and public health risks. Those risks are not irrelevant to the content of many family policies including marriage, adoption, custody, visitation and guardianship.
Unilateral vs. Bilateral Incentives: Evidence from the U.S. Pork Industry

The idea that individuals adapt their behaviors in response to changes in incentive systems is fundamental to most economic analysis. This paper incorporates the concept of price discovery costs into the incentive theory to offer a theoretical model and empirical evidence on the differential incentive effects of long-term contracts and spot markets. Using the US pork industry case where procuring intertemporally consistent weights of hogs have been critical to pork processors, we show why the effectiveness of unilaterally determined and posted incentive price for the hog quality by the pork packers on the intertemporal consistency erodes and why a bilateral incentive structure built through long-term hog procurement contracts is demanded, in the presence of volatile hog price and feed price movements. The MGARCH model analysis of USDA AMS data supported our hypotheses that long-term hog procurement contracts would help moderate the erosion relative to the spot markets, resulting greater intertemporal consistency of hog weights.
Are government and IMF forecasts useful? An application of a new market-timing test

Abstract We investigate the directional accuracy of GDP and price forecasts by the Japanese government and the IMF with a new method developed by Pesaran and Timmermann [Pesaran, M.H., Timmermann, A., 2009. Testing dependence among serially correlated multi-category variables. Journal of the American Statistical Association 485, 325–337]. Extending the literature to government forecasts, our results illustrate an empirical application of the new test. Our findings provide positive evidence about the usefulness of IMF forecasts whereas they cast doubts about government forecasts.
Comparing constitutional review by the European Court of Justice and the U.S. Supreme Court

Although neither is a constitutional court, both the U.S. Supreme Court and the European Court of Justice engage in extensive constitutional review. While the European Union does not have a constitution, the European Court often engages in what amounts functionally to constitutional review, particularly in relation to the EU’s quasi-federal structure. This article, comparing the two courts as constitutional adjudicators, explores the differences in style and rhetoric between the two, locating each in their respective institutional and cultural settings. It compares their approaches to interpretation as well as the source and scope of their legitimacy. Both courts have engaged in the constitutionalization of politics and seem at risk of politicizing their constitutions. The threats to their respective powers and legitimacy are, however, different. The U.S. Supreme Court is vulnerable to internal forces—the President, Congress, and national public opinion—whereas the European Court is mainly vulnerable to external forces—the member states and, particularly, the latter’s constitutional courts.
Optimal team incentives with CES production

Abstract This paper models an optimal incentive contract and a simple partnership with CES production functions. The results suggest that when employee inputs are complements, firm-wide incentives such as profit sharing and partnerships are quite valuable, even in large firms.
Constitutional Amendment by Stealth

Constitutional amendment ordinarily channels public deliberation through formal, transparent, and predictable procedures designed to express the informed aggregated choices of political, popular, and institutional actors. Yet the Government of Canada’s proposed senator selection reforms concealed a democratically problematic strategy to innovate an informal, obscure, and irregular method of constitutional change: constitutional amendment by stealth. There are three distinguishing features of constitutional amendment by stealth—distinctions that make stealth amendment stand apart from other types of informal constitutional change: the circumvention of formal amendment rules, the intentional creation of a convention, and the twinned consequences of both promoting and weakening democracy. Constitutional amendment by stealth occurs where political actors consciously establish a new democratic practice whose repetition is intended to compel their successors into compliance. Over time, this practice matures into an unwritten constitutional convention, and consequently becomes informally entrenched in the constitution, though without the democratic legitimacy we commonly associate with an amendment. In this article, I theorize constitutional amendment by stealth from legal, theoretical, and comparative perspectives, and consider its consequences for the rule of law.
Is Obtaining an Arrestee's DNA a Valid Special Needs Search under the Fourth Amendment? What Should (and Will) the Supreme Court Do?

In the past twenty years, advances in forensic DNA technology have revolutionized the American criminal justice system. The use of forensic DNA testing in America began in 1987, and its demonstrated scientific accuracy quickly led jurisdictions to accept expert testimony regarding DNA matches between suspects and crime scene evidence. Wielding the power to exonerate the innocent and apprehend the guilty, the use of DNA identification technology has become an indispensable resource for prosecutors and law enforcement officials, as well as for defense lawyers representing persons falsely accused or wrongfully convicted of crimes they did not commit. As states began to compile DNA profiles from convicted offenders, the need for a repository for these profiles resulted in the DNA database. Originally, DNA databases included only “those classes of offenders with a high recidivism rate, such as sex offenders and violent felons.” Recognizing the crime-solving potential of this technology, state legislatures soon began to expand the scope of DNA database statutes to include broader classes of offenders.
Learning your Child's Price: Evidence from Data on Projected Dowry in Rural India

We combine novel data and methodology to shed light on the contribution to dowry of a composite characteristic that we refer to as child quality. Our …ndings can be summarized as follows: (1) Dowry values are not determined by household characteristics alone: child quality is a very signi…cant determinant of dowry; (2) Quality is not a homogenous attribute for boys and girls: we distinguish between "high-level" quality (which matters for boys) and "low-level" quality (which matters for girls); (3) Highlevel quality does not begin revealing itself until the child enters school, whereas low-level quality starts becoming apparent at an earlier stage; (4) An increase in quality in girls appears to increase their dowry values: we argue that this is consistent with the idea that girls marry up and that quality has a horizontal component; (5) For boys, quality gets partially absorbed into educational attainments, whereas for girls quality continues to matter because it does not get translated into educational investments.
Forex trading and the WMR Fix

Since 2013 regulators have been investigating the activities of some of the world’s largest banks around the setting of daily benchmarks for forex prices. These benchmarks are a key linchpin of world financial markets, providing standardize prices used to value global equity and bond portfolios, to hedge currency exposure, and to write and execute derivatives’ contracts. The most important of these benchmarks, called the “London 4pm Fix”, “the WMR Fix” or just the “Fix”, is published by the WM Company and Reuters based on forex trading around 4:00 pm GMT. This paper undertakes a detailed empirical analysis of the how forex rates behave around the Fix drawing on a decade of tick-by-tick data for 21 currency pairs. The analysis reveals that the behavior of spot rates in the minutes immediately before and after 4:00 pm are quite unlike that observed at other times. Pre- and post-Fix changes in spot rates are extraordinarily volatile and exhibit strong negative serial correlation, particularly on the last trading day of each month. These statistical features appear pervasive, they are present across all 21 currency pairs throughout the decade. However, they are also inconsistent with the predictions of existing microstructure models of competitive forex trading.
The Operation Was a Success but the Patient Died: Aider Priorities Influence Decision Aid Usefulness

The usefulness of quantitative decision aid is often impaired and its usage impeded by the misaligned priorities of analysts and the middlemen who employ them. Analysts' professional orientation may dispose them to attend to analytic processes more than to deciders' needs and to stick with outdated practices. As a result, their analyses may be technically sound but disregard key knowledge, make unrealistic assumptions, or answer the wrong questions. Middlemen's financial or other conflicts of interest exacerbate such defects. Deciders may have to take more control of analyses (and analysts) and, for example, bypass middlemen.
Capitalization and Depreciation of Infrastructure by State and Local Governmental Entities

Proposals for capitalizing and depreciating infrastructure foreshadow a significant change in financial reporting for state and local entities. Justifications for present practices are examined. Costs and benefits of proposed changes are reviewed. Alternative practices are described.
Increasing Participation and Compliance in International Climate Change Agreements

Scientific and economic consensus points to the need for a credible and cost-effective approach to address the threat of global climate change, but the Kyoto Protocol to the U.N. Framework Convention on Climate Change appears incapable of inducing significant participation and compliance. We assess the Protocol and alternative policy architectures, with particular attention to their respective abilities to induce participation and compliance. We find that those approaches that offer cost-effective mitigation are unlikely to induce significant participation and compliance, while those approaches that are likely to enjoy a reasonably high level of implementation by sovereign states are sorely lacking in terms of their anticipated cost effectiveness. The feasible set of policy architectures is thus limited to second-best alternatives.
The Exchange Rate, Diversification, and Distribution in a Modified Ricardian Model with a Continuum of Goods

Recent studies have revived interest in the relationship between the exchange rate and economic development. This paper develops a dynamic Ricardian model with a continuum of goods to consider the issue from a different perspective. In the short run, a devaluation can boost profits in spite of real wage rigidity. Moreover, the resulting diversification helps offset the consequences for the trade balance of higher employment and profitability. Over time, and in the presence of learning-by-accumulation, the initial boost to investment induced by a devaluation could enable a country to gain a permanent foothold in new sectors at a higher real wage.
Voluntary Assurance of Voluntary CSR Disclosure

We study a firm's decisions to engage in socially responsible activities, voluntarily report on them, and purchase external assurance of the report. In our signaling model, neither firm type nor the level of activity is observed. We show that if voluntary assurance is not too expensive, the firm that engages in more socially responsible activities purchases external assurance and thus “selects” a separating equilibrium. As a result, CSR reports can be used to infer the level of activity and this causes all firms to engage in more socially responsible activity. Further, when voluntary assurance is required to support a separating equilibrium, greater monitoring by social activists increases the chosen quality of voluntary assurance—voluntary assurance and monitoring by social activists are complements, not substitutes.
Assessing the Incremental Value of Option Pricing Theory Relative to an Informationally Passive Benchmark

In modern finance, we measure the value of an active investment strategy by comparing its performance against the benchmark of passively holding the market portfolio and the riskless asset. We can evaluate the marginal contribution of a theoretical derivatives pricing model in the same way, by comparing its performance against an “informationally passive” alternative model. All rationally priced options must satisfy a number of conditions to rule out profitable static arbitrage. The Black-Scholes model, and others like it, are obtained by assuming an equilibrium that also forecloses profitable dynamic arbitrage opportunities. The passive model we consider incorporates only the fundamental properties of option prices that must hold to avoid static arbitrage, but has no theoretical content beyond that. We review different measures of model performance, and apply them to several versions of the Black-Scholes model and our passive model. As with active portfolio management, it turns out to be not that easy for an active model to do a lot better than a well-designed passive alternative. For example, the classic Black-Scholes turns out to be less accurate than the passive benchmark.
The "Blue Slip": Enforcing the Norms of the Judicial Confirmation Process

If there is any bright side to the unbelievably rancorous confirmation battles that marked the Clinton years - which are also inevitable in the Bush Administration - it is that they have exposed to public scrutiny customs and practices that enable individual Senators to wield a de facto veto over presidential nominees (and the defensive measures available to Presidents). After 1994, for example, when Republicans regained control of the House and the Senate, senators used the power of committee chairman and the "hold" to kill nominations for cabinet positions, department heads, ambassadorships, and judgeships on what seemed to be an unprecedented scale. For this, Republicans faced intense criticism. Now, recent controversies over President Bush's judicial appointments have brought to light another obscure Senate custom, the blue slip. In this essay, I will shed light on the blue slip, its relation to the protean concept of senatorial courtesy, and examine its function in the Senate's "advice and consent" role. In Part I, I reconstruct the operation and origins of the blue slip process; Part II discusses the recent flap over the blue slip occasioned by the announcement of Bush's first judicial nominees, whose selection was nearly overshadowed by the Republicans' loss of the Senate. I contrast the process's operation in the new Senate confirmation environment with earlier descriptions of it. Part III considers whether the process is consistent with the Constitution's allocation of power to appoint and confirm nominees to federal posts. While conceding that the blue slip finds no explicit sanction in the Constitution, I argue in Part IV that it functions as a mechanism to sanction a failure by the President to seek senators' advice on judicial nominees, not just their consent. Part V then examines the possibility for reforming this much-criticized process.
Deconvolution of fractional Brownian motion

We show that a fractional Brownian motion with H′∈(0,1) can be represented as an explicit transformation of a fractional Brownian motion with index H ∈(0,1). In particular, when H′=½, we obtain a deconvolution formula (or autoregressive representation) for fractional Brownian motion. We work both in the `time domain' and the `spectral domain' and contrast the advantages of one domain over the other.
The Privacy Pragmatic as Privacy Vulnerable

Alan Westin’s well-known and often-used privacy segmentation fails to describe privacy markets or consumer choices accurately. The segmentation divides survey respondents into “privacy fundamentalists,” “privacy pragmatists,” and the “privacy unconcerned.” It describes the average consumer as a “privacy pragmatist” who influences market offerings by weighing the costs and benefits of services and making choices consistent with his or her privacy preferences. Yet, Westin’s segmentation methods cannot establish that users are pragmatic in theory or in practice. Textual analysis reveals that the segmentation fails theoretically. Original survey data suggests that, in practice, most consumers are not aware of privacy rules and practices, and make decisions in the marketplace with a flawed, yet optimistic, perception of protections. Instead of acting as “privacy pragmatists,” consumers experience a marketplace myopia that causes them to believe that they need not engage in privacy analysis of products and services. Westin’s work has been used to justify a regulatory system where the burden of taking action to protect privacy rests on the very individuals who think it is already protected strongly by law. Our findings begin to suggest reasons behind both the growth of some information-intensive marketplace activities and some prominent examples of consumer backlash. Based on knowledge-testing and attitudinal survey work, we suggest that Westin’s approach actually segments two recognizable privacy groups: the “privacy resilient” and the “privacy vulnerable.” We then trace the contours of a more usable segmentation and consider whether privacy segmentations contribute usefully to political discourse on privacy.
Did a Switch in Time Save Nine

Franklin Delano Roosevelt’s court-packing plan of 1937 and the “switch in time that saved nine” animate central questions of law, politics, and history. Did Supreme Court Justice Roberts abruptly switch votes in 1937 to avert a showdown with Roosevelt? Scholars disagree vigorously about whether Roberts’s transformation was gradual and anticipated or abrupt and unexpected. Using newly collected data of votes from the 1931–1940 terms, we contribute to the historical understanding of this episode by providing the fi rst quantitative evidence of Roberts’s transformation. Applying modern measurement methods, we show that Roberts shifted sharply to the left in the 1936 term. The shift appears sudden and temporary. The duration of Roberts’s shift, however, is in many ways irrelevant, as the long-term transformation of the Court is overwhelmingly attributable to Roosevelt’s appointees.
Human Rights, American Exceptionalism, and the Stories We Tell

The Universal Declaration of Human Rights represents a remarkable expansion in the recognition of the fundamental rights of all peoples. Nonetheless, consensus on the implementation of these rights is elusive. Two commonly referenced obstacles to achieving such a consensus are: (1) the United States’ practice of unilaterally exempting itself from international human rights treaties, i.e., American exceptionalism; and (2) resistance from those who see the international human rights movement as a means of imposing Western values on non-Western cultures. Considering these as related issues, both deriving from the Eurocentric nature of contemporary international law, this essay suggests that a truly universal consensus will require a decolonizing of the underlying framework of human rights law.
Madoff: A Returns-Based Analysis

A fundamental question with regard to the Madoff scandal is whether there were any reasonable means by which typical investors and/or their consultants could have determined that the various investment vehicles by which investors accessedMadoff were in fact not offering what they claimed.While a detailed due diligence analysis of the Madoff infrastructure which included various feeder funds as well as Madoff’s auditing, custodial, and prime brokerage relationships may well have dissuaded investors or their consultants from investing in Madoff, most individual investors have neither the financial resources nor the skill to conduct such an analysis. For the most part, investors depend on the various funds and/or consultants to conduct adequate due diligence.Ex post, it is obvious that many such funds or consultants did not adequately conduct such analyses. In this article the authors examine a number of empirical characteristics derived from return streams of severalMadoff feeder funds whose return data were available in various databases.Results show that potential problems were evident in the footprint of the returns, but unfortunately those footprints were well hidden.
Financial development and the choice of trade partners

Abstract What determines the choice of countries' trade partners? We show theoretically and empirically that financial market imperfections affect the number and identity of exporters' destinations. Bigger economies with lower trade costs are more attractive markets because they offer higher export profits. This generates a pecking order of destinations such that firms serve all countries above a cut-off level of market potential. Credit constraints, however, raise this cut-off above the first best. Financially more advanced nations thus have more trade partners and go further down the pecking order, especially in sectors that rely heavily on the financial system. Our results provide new, systematic evidence that countries follow a hierarchy of export destinations, that market size and trade costs determine this hierarchy, and that financial frictions interact importantly with it. This has policy implications for the effects of cross-border linkages that depend on the number and identity of countries' trade partners.
Downsizing, A View from the Inside

The United States Department of Agriculture (USDA) is getting smaller. Total nondefense staffing in the federal government has declined by about 3 percent over the past fifteen years. Within this total, a number of agencies have absorbed reductions of over 17 percent, including USDA. This article begins with a brief history of USDA Next, it describes the distinction between the downsizing efforts of the 1980s and those that have occurred in the 1990s with respect to what has turned out to be a drastically different programmatic and political climate.
Geographic Patterns in Customer Service and Satisfaction: An Empirical Investigation:

Abstract When firms’ customers are located in geographically dispersed areas, it can be difficult to manage service quality because its relative importance is likely to vary spatially. This article shows how addressing such spatial aspects of satisfaction data can improve management’s ability to implement programs aimed at enhancing service quality. Specifically, managers can identify areas of high service responsiveness, that is, areas in which overall satisfaction is low but customers are highly responsive to improvements in service quality. The authors estimate the spatial patterns using geographically weighted regression, a technique that accounts for spatial dependence in the variables. They apply this methodology to a large national sample of automobile customers served by a network of dealerships across the United States. The authors also investigate the extent to which factors related to the physical and psychological landscape explain the importance that people in different regions place on deale...
Zen and the Art of Tort Litigation

Legal analysis in tort litigation should encourage deeper engagement with the plaintiff’s pain and suffering. Focusing more on understanding the causes and experience of human suffering – the Zen approach – will advance traditional tort goals of compensation and deterrence, as well as provide the plaintiff with a more positive litigation experience. This Article argues that current practices in tort litigation place too much emphasis on bodily harm and expert testimony, and unnecessarily position the plaintiff as a victim. Alternatively, a Zen approach recognizes that the body and mind are linked, places greater weight on direct, experiential testimony, and acknowledges the complexity and fluidity of the plaintiff’s identity.
The economic importance of financial literacy: theory and evidence

This paper undertakes an assessment of a rapidly growing body of economic research on financial literacy. We start with an overview of theoretical research, which casts financial knowledge as a form of investment in human capital. Endogenizing financial knowledge has important implications for welfare, as well as policies intended to enhance levels of financial knowledge in the larger population. Next, we draw on recent surveys to establish how much (or how little) people know and identify the least financially savvy population subgroups. This is followed by an examination of the impact of financial literacy on economic decision making in the United States and elsewhere. While the literature is still young, conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps. A final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy. (JEL A20, D14, G11, I20, J26)
Global Governance: The G20 and a Global Green New Deal

As the world recovers from the worst economic crisis since the Great Depression, the international community should promote a mix of policies to sustain this global recovery and create jobs through reducing carbon dependency, ecological degradation and poverty. Such a Global Green New Deal (GGND) requires a long-term commitment to implementing and coordinating "green investments" by the Group of 20 (G20), who should also adopt complementary pricing policies and foster international aid and other actions in support of the GGND. Developing economies should provide clean water and sanitation for the poor, create safety nets, invest in heath and education, and target energy and water poverty. Such a global strategy can revive economies, create jobs and improve the sustainability of world development. Special issue Global Governance—Challenges and Proposals for Reform
Approximate separability of symmetrically penalized least squares in high dimensions: characterization and consequences

We show that the high-dimensional behavior of symmetrically penalized least squares with a possibly non-separable, symmetric, convex penalty in both (i) the Gaussian sequence model and (ii) the linear model with uncorrelated Gaussian designs nearly matches the behavior of least squares with an appropriately chosen separable penalty in these same models. The similarity in behavior is precisely quantified by a finite-sample concentration inequality in both cases. Our results help clarify the role non-separability can play in high-dimensional M-estimation. In particular, if the empirical distribution of the coordinates of the parameter is known --exactly or approximately-- there are at most limited advantages to using non-separable, symmetric penalties over separable ones. In contrast, if the empirical distribution of the coordinates of the parameter is unknown, we argue that non-separable, symmetric penalties automatically implement an adaptive procedure which we characterize. We also provide a partial converse which characterizes adaptive procedures which can be implemented in this way.
Do Financial Analysts Add Value by Facilitating More Effective Monitoring of Firms’ Activities?:

Researchers argue that analysts’ information acquisition efforts increase firm value by facilitating monitoring of firms’ activities and, thereby, reducing agency costs. However, prior research pro...
Rodrigo's Portent: California and the Coming Neocolonial Order

I analyze developments in California as that state approached the tipping point at which its population would contain 50 percent minorities of color. I showed that elite whites were making, consciously or not, efforts to hang onto power beyond the point at which sheer numbers would suggest that they ought to be sharing it with citizens of color.