cssi/SciSciGPT-SciSciNet huggingface dataset:
A theory of LBO activity based on repeated debt-equity conflicts

Abstract We develop a theory of leveraged buyout (LBO) activity based on two elements: the ability of private equity-owned firms to borrow against their sponsors׳ reputation with creditors and externalities in sponsors׳ reputations due to competition and club formation. In equilibrium, the two sources of value creation in LBOs, operational improvements and financing, are complements. Moreover, sponsors that never add operational value cannot add value through financing either. Club deals are beneficial ex post by allowing low-reputation bidders with high valuations to borrow reputation from high-reputation bidders with low valuations, but they can destroy value by reducing bidders׳ investment in reputation. Unlike leverage of independent firms, driven only by firm-specific factors, buyout leverage is driven by economy-wide and sponsor-specific factors.
Proprietary Trading: Of Scourges, Scapegoats, and Scofflaws

The Volcker Rule was designed to strike a compromise between reestablishing the firewall between investment and commercial banking activities under the Glass-Steagall Act and retaining the synergistic benefits of bundling such services championed by the Gramm-Leach-Bliley Act. This paper will approach the topic from the perspective of regulators who must grapple with the Rule’s implementation. On the one hand, the financial community can be expected squarely to resist any aggressive implementation of the Rule; on the other, failure to adopt a set of rules and an associated supervisory program would almost surely result in regulators taking significant heat if the Rule does not at least have some impact on the configuration of Wall Street’s activities. Moreover, such efforts must be implemented in a manner that complements other initiatives mandated by Dodd-Frank.The regulators have staked out a three-pronged approach in their proposed rulemaking: (i) formalizing the classification of trading activities, (ii) adopting quantitative measures, and (iii) mandating a system of internal controls that provides a roadmap for regulatory compliance, supervision, and enforcement. This paper considers the arguments made for and against the Rule’s restrictions on proprietary trading, analyzes the public debate over the proposed implementation of the Rule, and offers some remarks on how regulators might advance the Rule’s moral imperative.
The Debt Crisis: Structural Explanations of Country Performance

Abstract This paper develops a cross-country statistical model of debt rescheduling, and the secondary market valuation of LDC debt, which links these variables to key structural characteristics of developing countries, such as the trade regime, the degree of income inequality, and the share of agriculture in GNP. Our most striking finding is that higher income inequality is a significant predictor of a higher probability of debt rescheduling in a cross-section of middle-income countries. We attribute this correlation to various difficulties of political management in economies with extreme inequality. We also find that outward-orientation of the trade regime is a significant predictor of a reduced probability of debt rescheduling.
Working Longer but Not Harder: The Effects of Incentivizing Inputs versus Outputs in a Heterogeneous Workforce

To address the empirical phenomenon that organizations often reward time on the job as an end in itself, we design an experiment in which participants solve anagram puzzles, manipulating whether a compensation pool generated from the output of paired workers is allocated based on the individual inputs of relative time spent or on the individual outputs of puzzles solved. Relative to an output-based allocation, we find that an input based allocation leads participants to spend more time on the task. However, when paired participants have widely different abilities, an input-based allocation also leads to less effort intensity, defined as puzzles solved per unit of time spent. We attribute these findings to fairness considerations, an interpretation we corroborate in a second experiment with purely individual incentives that finds the same effort duration advantage of input-based pay but no offsetting disadvantage in effort intensity.
Decision-Useful Asset Measurement from a Business Valuation Perspective

SYNOPSIS: This article proposes an approach to asset measurement rooted in business valuation theory and practice. In the context of a business valuation, investors' information needs and the asset...
Moral spillovers: The effect of moral violations on deviant behavior

a b s t r a c t Two experiments investigated whether outcomes that violate people's moral standards increase their deviant behavior (the moral spillover effect). In Study 1, participants with and without a moral mandate (i.e., a strong attitude rooted in moral conviction) read about a legal trial in which the outcome supported, opposed or was unrelated to their moral mandate. Relative to when outcomes supported moral man- dates, when outcomes opposed moral mandates people judged the outcome to be less fair, were more angry, were less willing to accept the outcome, and were more likely to take a borrowed pen. In Study 2, participants who recalled another person's moral violation were more likely to cheat on an experimen- tal task relative to angry or neutral condition participants. Taken together, results provide evidence for moral spillover: outcomes that violate moral standards increase deviant behavior.
The Role of Behavioral Economics and Behavioral Decision Making in Americans' Retirement Savings Decisions

Traditional economic theory posits that people make decisions by maximizing a utility function in which all of the relevant constraints and preferences are included and weighed appropriately. Behavioral economists and decision-making researchers, however, are interested in how people make decisions in the face of incomplete information, limited cognitive resources, and decision biases. Empirical findings in the areas of behavioral economics and judgment and decision making (JDM) demonstrate departures from the notion that man is economically rational, illustrating instead that people often act in ways that are economically suboptimal. This article outlines findings from the JDM and behavioral-economics literatures that highlight the many behavioral impediments to saving that individuals may encounter on their way to financial security. I discuss how behavioral and psychological issues, such as self-control, emotions, and choice architecture can help policymakers understand what factors, aside from purely economic ones, may affect individuals' savings behavior.
Brownfields at 20: A Critical Reevaluation

This Articles looks at brownfields policies in one state, New Jersey, and suggests how to make the approach of brownfields revitalization more development-centered and less developercentered. Following a basic description of the New Jersey Program, this Article discusses two specific developments, the BDA initiative and the recent “Grace Period Rule,” that changed some aspects of the program. ∗The author wishes to thank Ron Rosenberg for his insights on brownfields law and policy, Bill Wolfe of the New Jersey chapter of Public Employees for Environmental Responsibility (”PEER”) for information about New Jersey’s brownfields programs, and Clay Burns for invaluable research
Preference estimation in centralized college admissions from reported lists

This paper proposes a practical and data-driven preference estimation method from reported lists in a deferred acceptance mechanism when there are incentives to report these lists strategically. Data on centralized college admissions from Turkey show many pieces of evidence that students construct their lists strategically according to their admission chances and previous years’ admission outcomes. We develop a preference estimation method to evaluate reported lists within the set of colleges that are considered accessible to each student. This method allows us to create personal choice sets and to estimate student preferences by making valid utility comparisons that are supported by data and theory. We show the robustness of our estimation method compared to the existing estimation methods. A counterfactual admission analysis based on our preference estimates suggests that students from low-SES households are better off under a student sorting rule only based on high school GPAs.
Selling a cheaper mousetrap: Wal-Mart's effect on retail prices

Abstract I quantify the price effect of a low-cost entrant on retail prices using a case-study approach. I consider the effect of Wal-Mart entry on average city-level prices of various consumer goods by exploiting variation in the timing of store entry. The analysis combines two unique data sets, one containing opening dates of all US Wal-Mart stores and the other containing average quarterly retail prices of several narrowly-defined commonly-purchased goods over the period 1982–2002. I focus on 10 specific items likely to be sold at Wal-Mart stores and analyze their price dynamics in 165 US cities before and after Wal-Mart entry. An instrumental-variables specification corrects for measurement error in Wal-Mart entry dates. I find robust price effects for several products, including shampoo, toothpaste, and laundry detergent; magnitudes vary by product and specification, but generally range from 1.5–3% in the short run to four times as much in the long run.
Factors determining household fuel choice in Guatemala

This paper discusses the factors guiding household choices of cooking fuels. This is crucial for policies to combat indoor air pollution. Household income is an important, but not the only, factor. Opportunity costs of firewood also play an essential role. Empirical results are based on the 2000 Guatemalan LSMS survey, which includes a detailed section on energy use. Patterns of fuel use, energy spending, Engel curves, multiple fuels, the extent of fuel switching, and the determinants of fuel choice are analyzed.It is common in Guatemala to use multiple fuels for cooking – 48 and 27 per cent of urban and rural households do so. Modern fuels are often used alongside traditional solid fuels; modern fuels thus fail to displace solid fuels in many cases, particular in rural areas and the urban bottom half. This is paradoxical since a significant share of firewood users buy wood from the market, incurring costs that are substantial, also in comparison with the costs of modern fuels.
Effects of improving infrastructure quality on business costs : evidence from firm-level data

Economic development is affected by infrastructure services in both volume and quality terms. However, the quality of infrastructure is relatively difficult to measure and assess. The current paper, using firm-level data collected by a business environment assessment survey in 26 countries in Europe and Central Asia, estimates the marginal impacts on firm costs of infrastructure quality. The results suggest that the reliability or continuity of services is important for business performance. Firm costs significantly increase when electricity outages occur more frequently and the average outage duration becomes longer. Similarly, increased hours of water supply suspensions also reduce firms' competitiveness. In these countries, it is found that the total benefit for the economy from eliminating the existing electricity outages ranges from 0.5 to 6 percent of gross domestic product. If all water suspensions are removed, the economy could receive a gain of about 0.5 to 2 percent of gross domestic product. By contrast, the quality of telecommunications services seems to have no significant impact.
HomeGrocer.com: Anatomy of a failure

Abstract This case study examines the initiation, financing, development, and failed merger of an ambitious online grocery retail venture: HomeGrocer.com. It highlights the risks and challenges associated with developing a revolutionary venture. Even though the HomeGrocer.com team did many things right developmentally, some key errors and unfortunate timing resulted in them expanding too quickly and running low on cash. It also forced them to make a tough strategic decision about whether to scale back operations and renege on their IPO commitments or merge with a well-funded competitor, Webvan. The case discusses lessons that can be learned from business failure.
BUSINESS CYCLE ACCOUNTING FOR CHILE

We investigate sources of economic fluctuations in Chile during 1998–2007 within the framework of a standard neoclassical growth model with time-varying frictions (wedges). We analyze the relative importance of efficiency, labor, investment, and government/trade wedges for business cycles in Chile. The purpose of this exercise is twofold: (i) focusing the policy discussion on the most important wedges in the economy and (ii) identifying which broad class of models would present fruitful avenues for further research. We find that different wedges have played different roles during our studied period, but that the efficiency, labor, and investment wedges have had the greatest impact. We also compare our results with existing studies on emerging and developed economies.
The Big 4 Audit Report: Should the Public Perceive It as a Label of Quality?

ABSTRACT: There has been little research comparing the relative performance of the Big 4 CPA firms. Users of audited financial statements often practically have no other CPA firms to choose from for auditing services in the large public company auditing services market and thus desire more of this information. In 1,017 financial reporting lawsuits against Big 5 auditees filed from 1999 through 2004, the auditor litigation outcomes are used to proxy for the likelihood of audit failure and thus for audit quality. Control variables significant in prior empirical work were used in polytomous regression and in logistic regression. Ernst & Young has comparatively better auditor litigation outcomes, which proxy for a lower likelihood of audit failure and a stronger level of audit quality. The Ernst & Young results are robust; they are insensitive to the use of ten different model specifications. There is also evidence suggesting that PricewaterhouseCoopers may be a comparatively high quality auditor, but these l...
FLIP-FLOPPING: IDEOLOGICAL ADJUSTMENT COSTS IN THE UNITED STATES SENATE

Models of electoral competition in which candidates can change position at no cost predict the convergence of platforms in a two-candidate election. Such convergence is at odds with empirical observation. In this paper, I undertake a study of candidate positioning in the United States Senate and determine the extent to which electoral costs associated with changing position explain the ideological positions taken by Senators. Using over 50 years of roll call voting data, I use a simulated method of moments approach to estimate a dynamic model of candidate positioning for U.S. Senators. The ﬁndings support a model in which Senators face convex costs to changing position, with the best ﬁtting model being one with linear costs of adjustment. The model thus predicts severe punishments for “ﬂip-ﬂopping” Senators (those who make large changes in position). As a result of the signiﬁcant costs associated with adjusting position, the empirical validity of the Median Voter Theorem (which depends upon candidates being able to change position at no cost) is called into question.
Evidence Verité and the Law of Film

This Article explores a puzzle concerning the authority of certain film images that increasingly find themselves at the center of lawsuits in the United States.1 These are surveillance or “real time” film images that purport to capture an event from the past about which there is a dispute. Increasingly, this kind of “evidence verite”2—film footage of arrests, criminal confessions, and crime scenes—is routinely admitted in U.S. courts of law as the best evidence of what happened.3 This kind of evidence tends to overwhelm all other evidence, such as witness testimony, paper records, and other documentary evidence.4 Evidence verite also tends to be immune to critical analysis.5 It is rarely analyzed
Regulation Avoidance in the Banking Industry: The Case of 364 Day Lines of Credit

The purpose of this case is to offer a demonstration of Kane's regulatory dialectic and to discuss a line of credit that is a result of the interaction between the regulators and the regulated. Banks have been affected by new capital requirements. Calculation of these requirements considers not only on-balance sheet activities but off-balance sheet activities. Prior to these requirements, banks issued one year lines of credit for 365 days. These lines of credit have since been replaced with 364 day lines of credit. With maturity less than one year, the percentage of lines of credit considered in the calculations for required capital is reduced from 50% to 20%. Lines of credit are well established financial instruments and there is no reason, other than the changes in regulations, to make banks change the maturity dates by one day.
Reforming Field Performance Federal Aviation Regulations for Operational Safety and Consistency

This paper explores three regulations: 14 CFR § 25.113, 14 CFR § 25.125 and 14 CFR § 121.195 and their interactions with two other regulations: 14 CFR § 25.107, 14 CFR § 25.109. Together, these laws control the means by which takeoff and landing runway requirements of transport category aircraft are computed. Inspection of airline pilot manuals and interviews with transport pilots indicate that operational procedures are at odds with the design maxims given in popular textbooks. Because professional pilots fly using field performance guides based on ‘advisory’ data rather to distances prepared using the FAA ‘certified’ process, the authors recommend that the CFR be amended to reflect actual operational practices consistent with the current procedures contained within FAA published advisory circulars. Thus, FAA certified performance data would include performance on dry, wet, icy and other contaminated runways. Additionally, the manufacturers of four-engine aircraft should be able to certify field performance utilizing two engines of reverse thrust during both rejected take-offs and standard landing events. These recommendations would imply revision to 14 CFR § 25.113, 14 CFR § 25.125 and 14 CFR § 121.195, defining available braking coefficients on contaminated runways as well as stating an approved procedure to deploy reverse thrust to assist wheel braking.
Reclaiming Humanity: Economic, Social, and Cultural Rights as the Cornerstone of African Human Rights

This Article argues that economic, social, and cultural rights are the key to effectively realizing human rights in Africa. It contends that human rights discourse on the indivisible bundle of rights must be put into practice in the African context, where these rights are people's primary means of self-defense. First, the Article argues that African governments' failure to enthrone enforceable socio-economic rights compromises civil and political rights. It then examines the inextricable link between these rights and development, arguing that there is no justification for discriminatory enforcement of human rights. The Article addresses factors inhibiting the realization of these rights. It highlights the broad consequences of the continued marginalization of socio-economic rights. Finally, it urges a rejection of the Western model and explores approaches to improve the fortunes of these rights. It concludes that selective enforcement of human rights in the context of worsening social, economic, civil, and political conditions is a heedless truncation of humanity.
An experimental examination of competitor-based price matching guarantees

We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price-matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference. Lesser use of guarantees, combined with lower average prices and slower convergence to the collusive level, suggest that the mere presence of cost asymmetries may curtail collusive behavior.
Heterogeneous Effects of Job Displacement on Earnings

This paper considers how the effect of job displacement varies across different individuals. In particular, our interest centers on features of the distribution of the individual-level effect of job displacement. Identifying features of this distribution is particularly challenging—e.g., even if we could randomly assign workers to be displaced or not, many of the parameters that we consider would not be point identified. We exploit our access to panel data, and our approach relies on comparing outcomes of displaced workers to outcomes the same workers would have experienced if they had not been displaced and if they maintained the same rank in the distribution of earnings as they had before they were displaced. Using data from the Displaced Workers Survey, we find that displaced workers earn about $157 per week less, on average, than they would have earned if they had not been displaced. We also find that there is substantial heterogeneity. We estimate that 42% of workers have higher earnings than they would have had if they had not been displaced and that a large fraction of workers have experienced substantially more negative effects than the average effect of displacement. Finally, we also document major differences in the distribution of the effect of job displacement across education levels, sex, age, and counterfactual earnings levels. Throughout the paper, we rely heavily on quantile regression. First, we use quantile regression as a flexible (yet feasible) first step estimator of conditional distributions and quantile functions that our main results build on. We also use quantile regression to study how covariates affect the distribution of the individual-level effect of job displacement.
Why Do Some Firms Go Debt Free

This paper examines debt-free firms. We find that favorable equity market valuation and borrowing constraints contribute to these firms' extreme debt conservatism. Small debt-free firms with little access to credit markets are seen to raise equity while paying high dividends. Large debt-free firms, generating more cash flows relative to their investment needs, often pay off their debt while paying high dividends. The results suggest that high dividends for small debt-free firms help them establish good reputations in equity markets, while high dividends for large debt-free firms reduce the agency costs of free cash flow.
DEMOGRAPHICS AND PRODUCTIVITY

Abstract This paper examines the relationship between workforce demographics and aggregate productivity. Changes in the age structure of the workforce are found to be significantly correlated with ...
PARTICIPANT PERCEPTIONS AND DECISION-MAKING CONCERNING RETIREMENT BENEFITS

From 1964 until 2002, the State of Nebraska sponsored a defined contribution plan for its employees. During this period, the plan was unique among state pension plans because it was an individual account-type plan that offered participants the choice of a lump sum or annuity distribution upon retirement. Such a choice presents the opportunity to learn more about how individuals perceive financial risks and weigh various factors when deciding how to access their retirement benefits. This study reports the results of a new survey of Nebraska state workers who retired or terminated employment in 1997. The results offer a perspective on how individuals perceive their decisions 10 years later. The findings reveal three general themes. First, retirees tended to underestimate the financial risks associated with uninsured health care expenses. Sixty-five percent of retiree respondents said that they had initially underestimated such risk. Second, federal policies may influence the distribution decision. For example, many respondents cited tax penalties on lump sum distributions as a major factor in their decision, which is consistent with a high percentage choosing a nontaxable direct rollover distribution. Finally, the results provide a basis for cautious optimism that retirees will be able to successfully manage a present value sum distribution during retirement. Over 90 percent of retiree respondents reported that they were able to cover their living expenses 10 years after their retirement.
Consumer Protection Out of the Shadows of Shadow Banking: The Role of the Consumer Financial Protection Bureau

Consumer protection remains the stepchild of financial regulation. Notwithstanding the fact that the economic doldrums we find ourselves in originated in the under-regulated subprime mortgage sector, relatively few academic commentators focus on the role that consumer protection can play in reducing such risks as well as in restoring the balance between consumer and producer in the financial markets. This essay suggests that consumer protection regulation has an important role to play in the regulatory structure of the shadow banking sector. This essay does four things. First, it describes the role of shadow banking in the residential mortgage market — the shadow mortgage banking sector, as it were. Second, it contrasts two mortgages. One is emblematic of shadow mortgage banking during the Subprime Boom. The other is Dodd-Frank’s response to the excesses of the Subprime Boom — the “Qualified Mortgage.” It then evaluates whether “Qualified Mortgages” can restrain some of shadow mortgage banking’s excesses, and finds that they may be able to do so. It concludes by reviewing the first steps taken by the Consumer Financial Protection Bureau as it begins implementing Dodd-Frank’s mortgage-related provisions.
Consumption Volatility, Liquidity Constraints and Household Welfare

We evaluate the impact of increased income uncertainty and financial liberalisation in the US on consumption volatility and household welfare. We estimate Euler equations and measure the volatility of unpredictable changes in consumption as the squared residuals. We directly control for liquidity constraints using Survey of Consumer Finances data on access to credit, and document that despite the increase in household debt between 1983 and 2007, there was no decline in the proportion of liquidity constrained households. Consumption volatility increased significantly over this period, especially for liquidity constrained households, indicating substantial welfare losses.
Irreversibilities and the timing of environmental policy

Abstract The standard framework in which economists evaluate environmental policies is cost–benefit analysis, so policy debates usually focus on the expected flows of costs and benefits, or on the choice of discount rate. But this can be misleading when there is uncertainty over future outcomes, when there are irreversibilities, and when policy adoption can be delayed. This paper shows how two kinds of uncertainty — over the future costs and benefits of reduced environmental degradation, and over the evolution of an ecosystem — interact with two kinds of irreversibilities — sunk costs associated with an environmental regulation, and sunk benefits of avoided environmental degradation — to affect optimal policy timing and design.
Characteristics of Risk and Return in Risk Arbitrage

This paper analyzes 4,750 mergers from 1963 to 1998 to characterize the risk and return in risk arbitrage. Results indicate that risk arbitrage returns are positively correlated with market returns in severely depreciating markets but uncorrelated with market returns in f lat and appreciating markets. This suggests that returns to risk arbitrage are similar to those obtained from selling uncovered index put options. Using a contingent claims analysis that controls for the nonlinear relationship with market returns, and after controlling for transaction costs, we find that risk arbitrage generates excess returns of four percent per year. AFTER THE ANNOUNCEMENT OF A MERGER or acquisition, the target company’s stock typically trades at a discount to the price offered by the acquiring company. The difference between the target’s stock price and the offer price is known as the arbitrage spread. Risk arbitrage, also called merger arbitrage, refers to an investment strategy that attempts to profit from this spread. If the merger is successful, the arbitrageur captures the arbitrage spread. However, if the merger fails, the arbitrageur incurs a loss, usually much greater than the profits obtained if the deal succeeds. In this paper, we provide estimates of the returns to risk arbitrage investments, and we also describe the risks associated with these returns. Risk arbitrage commonly invokes images of extraordinary profits and incredible implosions. Numerous articles in the popular press detail large profits generated by famous arbitrageurs such as Ivan Boesky and even larger losses by hedge funds such as Long Term Capital Management. Overall, existing academic studies find that risk arbitrage generates substantial excess returns. For example, Dukes, Frohlich, and Ma ~1992! and Jindra and Walkling ~1999! focus on cash tender offers and document annual excess returns that far exceed 100 percent. Karolyi and Shannon ~1998! conclude
CUT-THROAT FRINGE COMPETITION IN AN EMERGING COUNTRY MARKET: TAX EVASION OR THE ABSENCE OF MARKET POWER?*

Brazil's established soft-drink firms recently lost ground to multiple low-price entrants, with small-scale operations and minimal advertising. While incumbents attributed such undercutting to entrants' lower costs from non-compliance with the law, ‘generics’ counterargued that incumbents' high prices stemmed from unilateral market power rather than cost heterogeneity. By estimating a structural model, I can single-handedly explain established brands' high prices through low equilibrium price elasticities of demand. Tax evasion in the fringe, while plausible, appears to be offset by higher procurement costs or less efficient scale. More generally, a competitive informal sector can alleviate the allocative distortions in certain concentrated industries.
A model of Social Security Disability Insurance using matched SIPP/Administrative data

Abstract We study Disability Insurance (DI) application behavior in the US using matched SIPP and administrative data over 1989–1995. Certain state-contingent earnings projections and eligibility probabilities are central to the analysis. We find evidence for a small work disincentive effect of DI that seems to be restricted to a subset of the DI beneficiaries, including low earning groups such as blue collar workers and those subject to economic dislocation. Processing time, Medicare value, unemployment, private health insurance, and health shocks are some of the major factors that affect application propensity. The behavioral response of female workers to various parameters of the DI program is found to be quite different from that of males.
Informational Standing After Summers

In its recent Wilderness Society v. Rey decision, the Ninth Circuit addressed the difficult question of when a statute may establish a right to informational standing. The decision interpreted the Supreme Court's decision in Summers v. Earth Island Institute, and concluded that general notice and appeal provisions in a statute that do not establish an explicit public right to information from the government are insufficient to establish informational standing. The Wilderness Society decision indirectly raised the broader question of when Congress may modify common law injury requirements or even Article El constitutional standing requirements. Although the Wilderness Society decision relied on the implications of Summers, the Ninth Circuit would have been better advised to examine Justice Kennedy's concurring opinions in Lujan v. Defenders of Wildlife and Summers. His opinions suggest that Congress has significant authority to expand citizen suit standing as long as it carefully defines the statutory injuries it seeks to remedy. Wilderness Society is important because it is the first court of appeals decision that attempts to reconcile Summers and FEC v. Akins, the crucial informational standing case. Although the result in Wilderness Society may be correct, the Ninth Circuit failed to grasp the full complexities of the Supreme Court's standing jurisprudence. This Article argues how to best interpret Lujan, Summers, and Akins in determining how much authority Congress has to establish informational standing and other standing rights that have divided lower federal courts. © 2012, Bradford C. Mank. * James B. Helmer, Jr. Professor of Law, University of Cincinnati College of Law. The author presented an early version of this Article at the Environmental Scholarship Symposium at Vermont Law School on October 22, 2010. The author wishes to thank Michael Solimine and Kim Brown for their comments. Environmental AffaiVl
Servicers and Mortgage‐Backed Securities Default: Theory and Evidence

We study conflicting incentives of the master and special servicers in handling troubled loans in a Commercial Mortgage-Backed Securities deal and how the frictions between the interests of the two servicers might be diminished if the master and special servicing rights are held by the same firm. We show that concentrating both servicing rights in one firm reduces the likelihood that a defaulted loan terminates in foreclosure.
Computation of projection regression depth and its induced median

Abstract Notions of depth in regression have been introduced and studied in the literature. The most famous example is Regression Depth (RD), which is a direct extension of location depth to regression. The projection regression depth (PRD) is the extension of another prevailing location depth, the projection depth, to regression. The computation issues of the RD have been discussed in the literature. The computation issues of the PRD and its induced median (maximum depth estimator) in a regression setting, never considered before, are addressed. For a given β ∈ R p exact algorithms for the PRD with cost O ( n 2 log n ) ( p = 2 ) and O ( N ( n , p ) ( p 3 + n log n + n p 1 . 5 + n p N I t e r ) ) ( p > 2 ) and approximate algorithms for the PRD and its induced median with cost respectively O ( N v n p ) and O ( R p N β ( p 2 + n N v N I t e r ) ) are proposed. Here N ( n , p ) is a number defined based on the total number of ( p − 1 ) dimensional hyperplanes formed by points induced from sample points and the β ; N v is the total number of unit directions v utilized; N β is the total number of candidate regression parameters β employed; N I t e r is the total number of iterations carried out in an optimization algorithm; R is the total number of replications. Furthermore, as the second major contribution, three PRD induced estimators, which can be computed up to 30 times faster than that of the PRD induced median while maintaining a similar level of accuracy are introduced. Examples and simulation studies reveal that the depth median induced from the PRD is favorable in terms of robustness and efficiency, compared to the maximum depth estimator induced from the RD, which is the current leading regression median.
Filtering for risk assessment of interbank network

Abstract Our paper contributes to the recent macroprudential policy addressing the resilience of financial systems in terms of their interconnectedness. We argue that beneath an interbank market, there is a fundamental latent network that affects the liquidity distributions among banks. To investigate the interbank market, we propose a framework that identifies such latent network using a statistical learning procedure. The framework reverse engineers overnight signals observed as banks conduct their reserve management on a daily basis. Our simulation-based results show that possible disruptions in funds supply are highly affected by the interconnectedness of the latent network. Hence, the proposed framework serves as an early warning system for regulators to monitor the overnight market and to detect ex-ante possible disruptions based on the inherent network characteristics.
Rethinking Prosecution History Estoppel

Under the rule of prosecution history estoppel, patent applicants who amend their claims during the course of patent prosecution assume a significant risk: the risk that a court will later construe the changes as concessions that should be read to limit patent scope. This risk is exacerbated by strong evidentiary presumptions under which courts are to assume, unless the patentee presents sufficient evidence to the contrary, that every change triggers estoppel, and that the resulting estoppel forfeits everything except that which the revised claim language literally describes. The justification for these presumptions is that, implemented in this fashion, prosecution history estoppel makes patent scope more predictable. In this Essay, I argue that the benefit comes at too high a price. Drawing on a large empirical study of patent prosecution, I show that, because of these evidentiary presumptions, estoppel is dangerously sensitive to differences among patent examiners and differences across technology categories. That is, estoppel treats similar applications in dissimilar ways, not because of differences on the merits, but instead because of the personal characteristics of the examiners involved and because of differences inherent to the types of technology at issue. A better rule, I argue, would minimize the significance of examiner and technology disparities by reversing the current evidentiary presumptions and thus recognizing estoppel only where there is clear evidence that the applicant and the examiner intended to forfeit a given scope of coverage.
Minimizing Probate-Error Risk

By prescribing the method by which courts evaluate the authenticity of wills, the law of will-execution allocates probate-error risk between false-positive outcomes and false-negative outcomes. When the court validates an inauthentic will, the result is a false-positive outcome. When the court invalidates an authentic will, the result is a false-negative outcome. Because false-positive outcomes result in the admission to probate of inauthentic wills and false-negative outcomes result in the denial of probate of genuine wills, both can be characterized as probate errors.This framework has been used to identify the problem with the conventional law of will-execution, which is that it heavily allocates risk in favor of false-negative outcomes and consequently produces probate errors that could easily be avoided. It has also clarified the objective of will-execution reform, which is to reallocate risk more evenly between false-positive outcomes and false-negative outcomes so that the total number of probate errors is minimized.This Article applies this framework more broadly to analyze potential methods of will-execution reform. Specifically, this Article identifies the various components of the law of will-execution that can be altered to reallocate probate-error risk and evaluates how different methods of reform can be manipulated to reallocate risk to varying degrees. With a better understanding of what is possible, state policymakers may be more willing to break away from the conventional law and implement change.
Fertility choice under child mortality and social norms

Abstract In most demographic transitions, declines in child mortality precede declines in net fertility rates. Variants of the Barro–Becker model of fertility fail to deliver this link. A simple extension, the inclusion of social norms regarding fertility, generates the desired effect.
Unraveling Emergency Justifications and Excuses for Terrorism

One significant strategy for justifying or excusing indiscriminate terrorism is to invoke ‘emergency’ circumstances. This paper examines two such arguments from extremity whereby overriding the principle of non-combatant immunity is claimed to be either justified or excused. Both approaches recognize that the right of non-combatant immunity should not necessarily be held above the value of survival, whether construed as individual or communal survival; yet, neither provides a convincing argument as to when and why the survival of some innocents ought to counterbalance the harms or rights violations of indiscriminate terrorism. However, once one begins to unravel the existing arguments from extremity used to excuse or justify indiscriminate terrorism, one discovers a broader rationale for conceivably excusing or justifying such acts and which does not require an emergency per se.
Efficiencies and Antitrust Reconsidered: An Evolutionary Perspective

The author reconsiders the issue of efficiencies and antitrust from the perspectives of evolutionary biology and the growing field of evolutionary economics. He begins by discussing how the term efficiency as currently used in antitrust today is more of a term of social science and economic ideology than a meaningful scientific concept. He then moves on to address how the lessons of evolutionary biology and economics, including the need for systemic diversity and unremitting competition at all systemic levels, can be applied to structural antitrust and efficiencies analyses. The author concludes that it is time to bring fresh perspectives to the study of efficiencies and antitrust. He recommends a series of reforms, including increased and more aggressive enforcement against horizontal mergers between competitors; renewed interest in vertical mergers and agreements; and more aggressive guarding of competitive diversity and opportunity against unfair predatory conduct by dominant firms, monopolies, and oli...
Environmental Policy for Business and Government

© 2003 Center for Business Ethics at Bentley College. Published by Balckwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK. Blackwell Publishing Ltd Oxford, UK ASR usiness and Society Review © 2002 Ce ter f r Busin ss Ethics at Bentley College 2003 1 8 0 rigi al Article U INESS AND SOCIETY REVIEW JOHN P. TIEM TRA Environmental Policy for Business and Government
The Intellectual Property Chapter of the Trans-Pacific Partnership Agreement and Investment in Developing Nations

The United States has some of the highest standards of intellectual property protection in the world, though many copyright and patent laws in the United States are limited through balancing provisions that provide exceptions to the exclusive rights conferred by the intellectual property system. The United States has engaged in efforts to raise intellectual property standards worldwide through creation of new global norms, such as through negotiations of free trade agreements like the currently negotiated Trans-Pacific Partnership Agreement. Higher levels of intellectual property protection may be unnecessary to attract investment in developing countries. In fact, increasing intellectual property standards may actually result in negative impacts on development for low- and middle-income countries. This paper examines the role of intellectual property rules in attracting investment for developing countries. It uses the proposals for the TPP's intellectual property chapter as an example on how higher levels of intellectual property enforcement may harm rather than promote investment.
Belief-free rationalizability and informational robustness

Abstract We propose an incomplete information version of rationalizability. An action is said to be belief-free rationalizable if it survives the following iterated deletion process. At each stage, we delete actions for a type of a player that are not a best response to some conjectures of the player. The conjecture has to put positive weight only on states, and types and actions of the other players which that type thinks possible, and actions of those types that have survived so far. We analyze some economic applications under this solution concept. This solution concept characterizes the implications of equilibrium when a player is known to have some private information but may have additional information. It thus answers the “informational robustness” question of what we can say about the set of outcomes that may arise in equilibrium of a Bayesian game if players may observe some additional information.
Predicting National and Regional Recessions Using Probit Modeling and Interest-Rate Spreads

This study extends the work of Estrella and Mishkin (1996, 1998) to show that interest-rate spreads and probit modeling can be used to predict recessions in many states as well as the nation. State recessions are defined as two or more consecutive quarters of declining real gross state product. The yield spread, SPREAD, is defined as the difference between the 10-year Treasury bond rate and the three-month Treasury bill rate. The national results are similar to those obtained by Estrella and Mishkin. Probit models are estimated for all 50 states using SPREAD and unemployment insurance claims, UI, as alternative explanatory variables. For 34 of the 50 states, SPREAD is significant at the 0.01 level as a predictor of state recessions. Much weaker results are obtained using UI. Simulations for the 1979–2001 period are used to compute loss functions for the national and state models at probability screens of 30, 40, 50, and 60 percent. The results demonstrate that probit models based on SPREAD can be useful in improving business and policy decisions in many states.
Resilience, Restoration, and Sustainability: Revisiting the Fundamental Principles of the Clean Water Act

The last truly significant revisions to federal water pollution legislation (the “Clean Water Act” or “CWA”) occurred in 1972. The CWA has been among the nation’s more successful environmental statutes, especially with respect to control of point source discharges of pollutants into surface waters. However, when viewed from the broader statutory objective to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters,” the statutory tools are either too dull to accomplish the task, or in some cases the appropriate tools have yet to be forged at all. In this Article, I argue that the focus of the CWA should be modified or expanded in four ways. First, we need to make better use of current concepts of ecosystem resilience rather than the notion of ecosystem “stability” that prevailed when the 1972 law was passed. Second, we need to develop the statutory and other tools necessary to press forward with the restoration goal of the statute. Third, we need to pursue the long-recognized statutory gap in redressing non-industrial forms of water pollution from a much wider range of sources than traditional industrial and municipal point source discharges. Finally, we need to revise our definitions of “waters” and “waters of the United States” to focus on the sustainability of aquatic ecosystems for human and natural uses, rather than on the antiquated concept of navigability.