cssi/SciSciGPT-SciSciNet huggingface dataset:
Estimation and Evaluation of Conditional Asset Pricing Models

We find that several recently proposed consumption-based models of stock returns, when evaluated using an optimal set of managed portfolios and the associated model implied conditional moment restrictions, fail to capture key features of risk premiums in equity markets. To arrive at these conclusions, we construct an optimal Generalized Method of Moments (GMM) estimator for models in which the stochastic discount factor (sdf) is a conditionally affine function of a set of priced risk factors, and we show that there is an optimal choice of managed portfolios to use in testing a null model against a proposed alternative generalized sdf. A large and growing literature explores the goodness-of-fit of dynamic as? set pricing models in which the stochastic discount factor (SDF) takes the conditionally affine form m*+i(0o) = 0?(#o) + where f is the vector of observed "priced" risk factors, the factor weights (0?, <p(') are in the mod? eler's information set Ju and Go is an unknown vector of parameters. SDFs of this form are implicit in conditional versions of the classical CAPM and its
Creditor rights and innovation: Evidence from patent collateral

Abstract I show that patents are pledged as collateral to raise significant debt financing, and that the pledgeability of patents contributes to the financing of innovation. In 2013, 38% of US patenting firms had previously pledged patents as collateral, and these firms performed 20% of research and development expense and patenting in Compustat. Employing court decisions as a source of exogenous variation in creditor rights, I show that patenting companies raised more debt, and spent more on R&D, when creditor rights to patents strengthened. Subsequently, these companies exhibited a gradual increase in patenting output and the use of patents as collateral.
A nonparametric approach to measurement of efficiency and technological change: The case of large U.S. commercial banks

The purpose of this paper is to derive the efficiency measures and the rate of technological change for a sample of large U.S. commercial banks by employing a nonparametric technique. This technique is used to construct a multiproduct production frontier relative to which the efficiency measures of the banks in the sample are calculated and the displacement of which over time provides a measure of the rate of technological change. The empirical results indicate that the relevant frontier shifted inward between 1980 and 1985 reflecting a high pace of technological advancement achieved by the banks in the sample. The pace varied significantly across the banks with some banks even regressing over time.
U.S. International capital flows: Perspectives from rational maximizing models

This paper examines several aspects of the debate about the causes of the U.S. current account deficit in the 1980's. It surveys several popular explanations before developing two theoretical models of international capital flows. The first model is Ricardian, and it extends the analysis of Stockman and Svensson (1987): The second model is an overlapping generations framework. The major difference in predictions of these two models involves the effects of government budget deficits on the exchange rate and the current account. An update of the empirical investigation of Evans (1986) suggests that his VAR methodology is completely uninformative with additional data. Some empirical results on the importance of risk aversion in modeling international capital market equilibrium are also presented.
Optimistic Reporting and Pessimistic Investing: Do Pro Forma Earnings Disclosures Attract Short Sellers?

We contribute to the debate regarding the informativeness of pro forma earnings disclosures by providing evidence that a group of informed traders, short sellers, trade as if firms’ voluntary non-GAAP earnings disclosures create information advantages they can exploit. While prior research indicates that short sellers identify firms that will experience declining operating performance, we investigate whether the disclosure of pro forma earnings acts as an indicator of future price declines that is distinct from poor operating performance. We find that short selling is significantly higher in quarters in which firms disclose non-GAAP earnings metrics relative to quarters in which they do not disclose adjusted earnings measures. Moreover, we find that short selling is significantly positively associated with the exclusion of recurring items and, more particularly, with the exclusion of stock-based compensation. We also find some evidence that short sellers trade more when managers exclude expense items to appear to meet analysts’ expectations on a pro forma basis when they fall short of expectations based on GAAP operating earnings. Finally, we find evidence based on abnormal returns suggesting that short sellers profit from short selling around earnings announcements containing pro forma earnings disclosures. Overall, the results are consistent with the notion that sophisticated market participants view pro forma earnings disclosures negatively and trade in order to take advantage of potential information asymmetries created by these disclosures.
Racial Bias in American Foster Care: The National Debate

In disproportionately high numbers, Native American and African American children find themselves in the American foster care system. Empirical data establish that these children are removed from their families at greater rates than other races and stay in foster care longer, where they are often abused, neglected, and then severed from their families forever. For the past few decades, a vigorous debate has raged regarding whether these children are actually at greater risk for maltreatment if left at home or are just targets of discrimination in a hegemonic institution. Although the research previously showed no racial differences in child maltreatment rates, the latest Congressional study has found that African American and Native American children are at greater risk for child maltreatment than children of other races. Despite the caution with which researchers have interpreted the data and implicated future policies, scholars are asking whether, as a society, we are protecting or destroying children from these historically disempowered races. Foster care laws offer little practical guidance because the overarching legal
Partial Identification of Distributional Parameters in Triangular Systems

I study partial identification of distributional parameters in triangular systems. This model consists of a nonparametric outcome equation and a selection equation. This allows for general unobserved heterogeneity and selection on unobservables. The distributional parameters considered in this paper are the marginal distributions of potential outcomes, their joint distribution, and the distribution of treatment effects. I investigate how different types of plausible restrictions contribute to identifying these parameters. The restrictions I consider include stochastic dominance and quadrant dependence between unobservables and monotonicity between potential outcomes. My identification applies to the whole population without a full support condition on instrumental variables and does not rely on rank similarity. I also provide numerical examples to illustrate the identification power of each assumption.
Bank Consolidation and Small Business Lending: The Role of Community Banks

This paper examines how bank consolidation activity affected small business lending in local U.S. banking markets during two 3-year study periods, focussing on the role played by community banks in the process. During the 1994–1997 period, we find that consolidation activity involving big banks is associated with lower loan growth, whereas community bank consolidations and a greater presence of community banks in the market are associated with higher loan growth. During the 1997–2000 period, consolidation activity is either unrelated to small business loan growth or is associated with higher loan growth. In both study periods we find that, net of organization reclassifications due to consolidation or asset growth, the share of small business lending funded by community banks rose, particularly in markets undergoing consolidation.
EVOLUTION AND TIME HORIZONS IN AN AGENT-BASED STOCK MARKET

Recent research has shown the importance of time horizons in models of learning in finance. The dynamics of how agents adjust to believe that the world around them is stationary may be just as crucial in the convergence to a rational expectations equilibrium as getting parameters and model specifications correct in the learning process. This paper explores the process of this evolution in learning and time horizons in a simple agent-based financial market. The results indicate that, although the simple model structure used here replicates usual rational expectations results with long-horizon agents, the route to evolving a population of both long- and short-horizon agents to long horizons alone may be difficult. Furthermore, populations with both short- and long-horizon agents increase return variability, and leave patterns in volatility and trading volume similar to actual financial markets.
Grain-scale thermoelastic stresses and spatiotemporal temperature gradients on airless bodies, implications for rock breakdown

Thermomechanical processes such as fatigue and shock have been suggested to cause and contribute to rock breakdown on Earth, and on other planetary bodies, particularly airless bodies in the inner solar system. In this study, we modeled grain-scale stresses induced by diurnal temperature variations on simple microstructures made of pyroxene and plagioclase on various solar system bodies. We found that a heterogeneous microstructure on the Moon experiences peak tensile stresses on the order of 100 MPa. The stresses induced are controlled by the coefficient of thermal expansion and Young's modulus of the mineral constituents, and the average stress within the microstructure is determined by relative volume of each mineral. Amplification of stresses occurs at surface-parallel boundaries between adjacent mineral grains and at the tips of pore spaces. We also found that microscopic spatial and temporal surface temperature gradients do not correlate with high stresses, making them inappropriate proxies for investigating microcrack propagation. Although these results provide very strong evidence for the significance of thermomechanical processes on airless bodies, more work is needed to quantify crack propagation and rock breakdown rates.
Race in Ordinary Course: Utilizing the Racial Background in Antitrust and Corporate Law Courses

This article is about the discourses in law school classes in which non-white students are in classes with white students. While I stake a position distinct from critical race theorists, I do not analyze critical race theory or the large body of scholarship pertaining thereto in this article. I limit my discussion to my use of race in teaching traditional law school subjects, specifically antitrust and corporate law. I present this article in two parts.In Part I, I describe the challenges of using critical race theory to introduce discussions of race in traditional law school subjects. Race is interjected as an outsider. In Part II, I present my race in ordinary course approach. I do not suggest that my approach is superior to Critical Race Theory; I offer it only as another avenue of discussing race. In my approach, the subject matter drives the analysis and race is visibly interwoven into conventional legal analysis.
The Margins of US Trade (Long Version)

Recent research in international trade emphasizes the importance of …rms’extensive margins for understanding overall patterns of trade as well as how …rms respond to speci…c events such as trade liberalization. In this paper, we use detailed U.S. trade statistics to provide a broad overview of how the margins of trade contribute to variation in U.S. imports and exports across trading partners, types of trade (i.e., arm’s-length versus related-party) and both short and long
Tinkering with Success: College Athletes, Social Media and the First Amendment

Good law does not always make good policy. This article seeks to provide a legal assessment, not a policy directive. The policy choices made by individual institutions and athletic departments should be guided by law, but absolutely left to institutional discretion. Many articles written on college student-athletes' social media usage attempt to urge policy directives clothed in constitutional analysis.In this author's opinion, these articles have lost perspective - constitutional perspective. This article seeks primarily to provide a legal and constitutional assessment so that schools and their athletic departments will have ample information to then make their own policy choices.
Slow Moving Debt Crises

We study slow moving debt crises, self-fulfilling equilibria where high interest rates due to fears of higher future default leads to a gradual but faster accumulation of debt, ultimately validating investors’ fears. We show that slow moving crises arise in a variety of settings, both when fiscal policy follows a given rule or when it is chosen by an optimizing government. We discuss how multiplicity is avoided for low debt levels, for sufficiently responsive fiscal policy rules, and for long enough debt maturities. When the equilibrium is unique, debt dynamics are characterized by a tipping point, below which debt fall and stabilizes and above which debt and default rates grow. We provide game-theoretic foundations for our approach.
Lawfare: A War Worth Fighting

Lawfare exists and is used every day by both those seeking to achieve legitimate ends and those seeking to achieve illegitimate ends. Lawfare is a war worth fighting; failing to fight lawfare could seriously jeopardize your client's interests, and, more importantly, it could jeopardize your ability to help bring an end to a violent conflict or prosecute those responsible for crimes committed during a conflict.There are three similarities between legal mechanisms and processes and warfare that I think support the notion that lawfare is a useful concept. The first is that they often pursue the same objectives; the second is that they have a broadly similar approach for accomplishing these objectives – strategic, operational, and tactical; and the third is that lawfare, as part of a conflict resolution approach, is often times fought before the hot conflict, during the hot conflict, and the hot conflict.
Reparations for Mass Atrocities as a Path to Peace: After Kiobel V. Royal Dutch Petroleum Co., Can Victims Seek Relief at the International Criminal Court?

The US Supreme Court's ruling in Kiobel v. Royal Dutch Petroleum represents the culmination of a long campaign to establish a unitary power in the White House over matters of international law, and to marginalize the courts, law, and treaties. Victims of mass atrocities and their descendants have suffered from this trend towards greater impunity. The ATS barely survived its last encounter with the Supreme Court in 2004, and its usefulness has eroded steadily since that time, in a number of cases dealing with China, Nigeria, Saudi Arabia, South Africa, and Sudan. Advocates for human rights, victimized groups, and genocide prevention have consistently supported the right of victims of mass atrocities to pursue lawsuits under the law of nations in countries other than those in which the extermination, persecution, or other atrocities occurred. However, the law is being politicized as amici briefs by the Department of Justice and "Statements of Interest" by the State Department override the rules of the law of nations, not to mention the intent of the American founders and basic principles of justice and fairness. The Supreme Court's evisceration of the ATS in Kiobel deprived international law of a key pillar of support. It arguably violates the international legal duties of the United States to prevent, punish, and remedy mass atrocities. It conflicts with the original understanding of the law of nations as rules, enforceable under federal common law and the ATS, that limit executive power so as to promote peace. As the NGO Platform informed the British Parliament, Kiobel "remove[s] one of the few judicial remedies available to victims of corporate human rights abuses and grant[s] global impunity to companies who commit such wrongs," including crimes against humanity. This Article describe the vision of early American leaders that a robust ATS would safeguard victims of transnational dangers. The key purpose of the ATS was to promote peace by offering an alternative to sovereign retaliation. The Bush and Obama administrations thwarted the promise of the ATS in five ways: advocating reduced extraterritorial application, opposing non-state actors' accountability under the ATS, pleading for deference to sovereign immunity in mass atrocity cases, undermining the law of nations as being ineffective (non-self-executing) verbiage, and invoking discretionary doctrines that destroy federal court jurisdiction over "political questions." Promising recent developments might lead to the International Criminal Court (ICC) filling the gap left by Kiobel, and promoting peace by offering a forum for the peaceful resolution of grievances. The ICC could fund compensation, rehabilitation, and local reconciliation under Article 75 of the Rome Statute.
Health, Income, and Retirement: Evidence from Nineteenth Century America

The United States population has grown older. Increases in life expectancy and a low fertility rate have dramatically changed the composition of the population. This change in the age composition of the population has led to concerns over the viability of the Social Security system. One way to increase the solvency of the Social Security system would be to increase participation rates among the elderly.
The robustness of hedonic price estimation: urban air quality

Theoretical and empirical problems with hedonic benefit estimation (Rosen 1974) are becoming increasingly apparent (see, e.g., Atkinson and Crocker 1987; Bartik and Smith 1984; Horowitz 1984; Butler 1982; Roback 1982; Rosen 1979). However, there has been no systematic comparative analysis, using a single data set, of the relative magnitudes of the potential inaccuracy caused by individual problems. In this paper we utilize a detailed data set to address four issues: (1) variable selection and treatment, (2) measurement error, (3) functional form, and (4) error distribution. In particular, this research explores the robustness of hedonic-based estimates of mar-
Current account imbalances: A new approach to assess external debt sustainability

Abstract The aim of this paper is to analyze the external debt of three Euro area economies, Italy, Spain, and Germany. To study the effect of debt on the investment-consumption dynamics in those countries, we first discuss the causes, sources, and adjustment processes of current account deficits in industrialized economies, with a particular focus on the Eurozone member states. We then introduce new empirical measures of sustainability. Instead of using the common measure of external debt over GDP, we use debt over assets. To study the dynamics of external debt sustainability we use an intertemporal model of finite time horizon, which we numerically solve through Non-linear Model Predictive Control (NMPC) method. Using our numerical solution method, we provide a calibration of the external debt sustainability for Italy, Spain, and Germany. In the calibration of our model for those countries we also measure sustainability by the debt to asset ratio and show that the periphery economies moved toward a slow moving debt crisis, whereas Germany moved into a stable environment. Yet, the latter is likely to be affected by the former in the long run.
What You See Is All There Is

News reports and communication are inherently constrained by space, time, and attention. As a result, news sources often condition the decision of whether to share a piece of information on the similarity between the signal and the prior belief of the audience, which generates a sample selection problem. This article experimentally studies how people form beliefs in these contexts, in particular the mechanisms behind errors in statistical reasoning. I document that a substantial fraction of experimental participants follows a simple “what you see is all there is” heuristic, according to which participants exclusively consider information that is right in front of them, and directly use the sample mean to estimate the population mean. A series of treatments aimed at identifying mechanisms suggests that for many participants, unobserved signals do not even come to mind. I provide causal evidence that the frequency of such incorrect mental models is a function of the computational complexity of the decision problem. These results point to the context dependence of what comes to mind and the resulting errors in belief updating.
What Enron Means for the Management and Control of the Modern Business Corporation: Some Initial Reflections

The Enron case challenges some of the core beliefs and practices that have underpinned various positions in the debates about corporate law and governance, including mergers and acquisitions, since the 1980s. In particular, Enron raises at least the following problems for the received model of corporate governance: First, it provides another set of reasons to question the strength of the efficient market hypothesis, here, the company’s dizzyingly high stock price despite transparently irrational reliance on its auditors’ compromised certification. Second, it undermines faith in the corporate governance mechanism – the monitoring board – that has been offered as a substitute for unfettered shareholder access to the market for corporate control. In particular, the board’s capacity to protect the integrity of financial disclosure has not kept pace with the increasing reliance on stock price performance in measuring and rewarding managerial performance. Third, it suggests the existence of tradeoffs in the use of stock options in executive compensation because of the potential pathologies of the risk-preferring management team. Fourth, it shows the poor fit between stock-based employee compensation and employee retirement planning. More generally, it raises questions about the shift in retirement planning towards defined contribution plans, which make employees risk bearers and financial planners, and away from defined benefit plans, which impose some of the risk and fiduciary planning obligations on firms. Although the disclosure, monitoring and other failures may lead to useful reforms, Enron also reminds us that there is a problem that cannot be solved but can only be contained in the tension between imperfectly fashioned incentives and self-restraint.
Goldman on Probabilistic Inference

In his recent book, Knowledge in a SocialWorld, Alvin Goldman claims to haveestablished that if a reasoner starts withaccurate estimates of the reliability of newevidence and conditionalizes on thisevidence, then this reasoner is objectively likely to end up closer to thetruth. In this paper, I argue that Goldman'sresult is not nearly as philosophicallysignificant as he would have us believe. First, accurately estimating the reliability ofevidence – in the sense that Goldman requires –is not quite as easy as it might sound. Second, being objectively likely to end upcloser to the truth – in the sense that Goldmanestablishes – is not quite as valuable as itmight sound.
"The Living Oracles": Legal Interpretation and Mormon Thought

Legal scholars have recently turned their attention to “religious legal theory,” asking what various religious traditions have to say about law and legal practices. While some traditions - such as Islam or Judaism - have well-developed legal traditions, understanding what less juristic faiths have to say about law is more difficult. This article seeks to contribute to this discussion by asking how Mormonism might be used to think about legal questions. Lacking a formal theological or juristic tradition, the article argues that one may nevertheless turn to Mormon practices for insights. Using the adjudication of civil disputes in nineteenth-century church courts as an example, this article develops Mormon theories of property and contract.
Private school location and neighborhood characteristics

Abstract Using data from Illinois, I examine relationships between the number of private schools and characteristics of the public schools and surrounding population. I find positive, statistically significant relationships between number of private schools in 1998 and public school 3rd grade class size, the percent college educated, and the percent over 55 years of age. I find significant negative relationships between number of private schools and average household income and racial concentration. Looking at private school entry, areas with larger increases in the school-aged population had less entry, and areas with increasing income dispersion experienced greater entry. The results suggest that if a universal education voucher program is introduced, parents in relatively well-educated, racially diverse, and more moderate income areas will likely have greater access to private school options because of more existing private schools in their area. These areas will also likely have more private school entry in response.
Civil Rights Ecosystems

The Philadelphia and Houston Police Departments are similarly sized, but over a recent two-year period, ten times more civil rights suits were filed against Philadelphia and its officers than were filed against Houston and its officers. Plaintiffs in cases brought against Philadelphia and its officers were awarded 100 times more in settlements and judgments. What accounts for these differences? Although the frequency and severity of misconduct and injury may play some role, I contend that the volume and outcome of civil rights litigation against any given jurisdiction should be understood as a product of what I call its civil rights ecosystem. Scientists define ecosystems as communities of living and nonliving elements that are interconnected and interactive. I define civil rights ecosystems as collections of actors—including plaintiffs’ attorneys, state and federal judges, state and federal juries, and defense counsel—and legal rules and remedies—including state tort law, Section 1983 doctrine and defenses, damages caps, and indemnification policies—that are similarly interconnected and interactive. Variation in different aspects of a civil rights ecosystem determines the frequency with which claims against government are brought, the frequency with which those claims are successful, and the magnitude of their success. In this Article, I describe some key elements of civil rights ecosystems and the ways in which these elements interact; wide variation in civil rights ecosystems across the country; and ecosystem feedback loops that can magnify regional variation. Throughout, I illustrate aspects of this framework with examples drawn from an original dataset of almost 1200 civil rights cases filed in five federal districts around the country and surveys and interviews of dozens of plaintiffs’ attorneys who represented plaintiffs in these cases. Finally, I consider the implications of these observations. Understanding civil rights filings and payouts as the product of civil rights ecosystems reveals significant conceptual gaps in Section 1983 doctrine and scholarly debate about the relationship between constitutional rights and remedies, raises important questions about the mechanics and desirability of regional variation in constitutional protections, and offers insights valuable for courts, advocates, and government officials seeking to change the scope and success of suits to enforce civil rights.
Budget Stabilization Fund: Structural Features of the Enabling Legislation and Balance Levels

This article examines what leads to high balances of the budget stabilization fund (BSF) to make it a countercyclical fiscal tool. Checking state BSF laws, this article classifies BSF structural features into purposes, funding sources, balance caps, and use approval procedures. Using panel data (1979–1999) and controlling for related variables, this article tests the features' effects on BSF levels over the sample period and different phases of the economy to identify specific effects of the features in boom and lean years. The article also forwards policy recommendations for state governments to consider in designing or revising their BSF legislation.
The Rule of Law and Equality

This paper describes and defends a novel and distinctively egalitarian conception of the rule of law. Official behavior is to be governed by preexisting, public rules that do not draw irrelevant distinctions between the subjects of law. If these demands are satisfied, a state achieves vertical equality between officials and ordinary people and horizontal legal equality among ordinary people.
Tax Policy Issues in Designing a Carbon Tax

A carbon tax is a promising tool for discour aging the greenhouse gas emissions that cause climate change. In principle, a well-designed tax could reduce the risk of climate change, minimize the cost of emissions reductions, encourage innovation in low-carbon technologies, and raise new public revenue. But designing a real-world carbon tax poses significant challenges. We analyze those challenges from a public finance perspective, emphasizing three tax policy design issues: setting the tax rate, collecting the tax, and using the resulting revenue. The benefits of a carbon tax will depend on how policymakers address those issues.
Common Law Marriage and Teen Births

Whether common law marriage (CLM) in the US affects teen birth rates is the central question we address. CLM effects were identified through cross-state and time variation, as four states repealed the law over the period of study. Using microdata from Current Population Survey Fertility supplements 1990–2010 and state-level data from CDC Vital Statistics 1988–2012 we found that, in the states where CLM was first available but then repealed, the odds that teens would become new mothers increased. Births to teens younger than 18 were more responsive to availability of CLM than those to teens aged 18 or 19 or to women in their early twenties. The likelihood of becoming a mother increased where CLM was available in the years prior to its repeal. Teens were more responsive to information about availability of CLM about three years later than to knowing that it is available at the time of potential conception. To the extent that they reduce teen births CLM laws are socially desirable and states that still have CLM may be better off by not repealing the law.
Trading Fast and Slow: Security Market Events in Real Time

Continuous security markets evolve as a sequence of timed events. This study is a descriptive analysis of NYSE market data in which trades, quote revisions and orders are considered to constitute a stationary multivariate point process, which can be analyzed by standard time- and frequency-domain techniques. There are three principal findings. (1) Although occurrence intensities for different types of events are positively correlated, they are not characterized by the uniform proportionality that a strict sense of time deformation would require. (2) The frequencies and durations of informational epochs (periods of uncertainty and informational asymmetry) are highly variable. (3) The correlation in arrivals of market orders and opposing limit orders is zero or negative over periods of thirty minutes or less.
Assessing political support in China: Citizens’ evaluations of governmental effectiveness and legitimacy

Whether the Chinese Communist regime can maintain socio‐political stability and survive the potentially turbulent transition to the post‐Deng Xiaoping era remains a serious question challenging many China watchers. Assuming that political support is vital to the stability of any regime, the authors seek to answer this question by examining two major components of political support, instrumental support (citizens’ evaluations of governmental effectiveness) and affective support (citizens’ evaluations of governmental legitimacy). Using data collected from a public opinion survey conducted in Beijing, China in late 1995, this study explores the levels of both affective support and instrumental support, and the nature of the relationship between these two types of political support in China today. The results of this study show that: (1) the current Chinese regime enjoys a moderately high level of affective support and a slightly lower level of instrumental support; (2) the two types of political support are ...
Corporate Governance, Risk Management, and the Financial Crisis: An Information Processing View

Manuscript Type: Perspective Research Question/Issue: What were the reasons for poor risk management on the board level before and during the financial crisis? Were there systemic information processing problems that an alternative board design could alleviate? Research Findings/Insights: Using an information processing perspective, we identify two reasons for boards failing to manage risk well during the financial crisis: (1) board members did not have access to relevant information on the risks management incurred because they had no control over information supply; and (2) board members were unable to process the available risk-related information, and lacked incentives or power to influence managerial decision making. Based on insights from cybernetics and decision making theory, we suggest increasing board level information processing and decision making capabilities by including multiple boards for different stakeholders to create a division of power and labor. We label this alternative structure network governance and posit that it allows superior risk management. Theoretical/Academic Implications: The paper illustrates that the unitary board structure's systemic shortcomings increase the likelihood of poor risk management at the board level. The solutions proposed are an important theoretical advancement of the discussion on ongoing board failure in increasingly complex business environments. Practitioner/Policy Implications: This paper is one of few providing actual recommendations based on a systemic insight. Enlightened shareholders and/or managers could introduce network governance by amending corporate constitutions. Regulators should require firms considered too big to fail to adopt network governance or pay the cost for regulators establishing a risk-monitoring unit in each firm.
The Marrakesh Puzzle

This article analyzes the puzzle created by the 2013 Marrakesh Treaty in its provisions concerning the cross-border exchange of copies of copyrighted works made for use by persons who are “blind, visually impaired, or otherwise print disabled” (copies known as “accessible format copies”). The analysis should assist executive and legislative experts as they seek optimal methods for implementing the Treaty. The article provides an overview of the Treaty, notes its unique features, and examines in detail its provisions on the cross-border exchange of accessible format copies. The article discusses three possible sources for implementation tools – choice of law rules, the exhaustion doctrine, and labeling – and concludes that a suitable method of implementing the cross-border exchange provisions of the Treaty may consist of a combination of appropriately-selected rules for choice of applicable law and rules for labeling.
Forcing Firms to Talk: Financial Disclosure Regulation and Externalities.

We analyze a model of voluntary disclosure by firms and the desirability of disclosure regulation. In our model disclosure is costly, it has private and social value, and its precision is endogenous. We show that (i) a convexity in the value of disclosure can lead to a discontinuity in the disclosure policy; (ii) the Nash equilibrium of a voluntary disclosure game is often socially inefficient; (iii) regulation that requires a minimal precision level sometimes but not always improves welfare; (iii) the same is true for subsidies that change the perceived cost of disclosures; and (iv) neither regulation method dominates the other. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.
Affirmative Action and Its Mythology

For more than three decades, critics and supporters of affirmative action have fought for the moral high ground through ballot initiatives and lawsuits, in state legislatures, and in varied courts of public opinion. The goal of this paper is to show the clarifying power of economic reasoning to dispel some myths and misconceptions in the racial affirmative action debates. We enumerate seven commonly held (but mistaken) views one often encounters in the folklore about affirmative action (affirmative action may involve goals and timelines, but definitely not quotas, e.g.). Simple economic arguments reveal these seven views to be more myth than fact.
Sex, Drugs, and Catholic Schools: Private Schooling and Non-Market Adolescent Behaviors

This study examines the effects of private schooling on adolescent non-market behaviors. We control for differences between private and public school students by making use of the rich set of covariates available with our NELS micro-dataset. We also employ an instrumental-variables strategy that exploits variation across metropolitan areas in the costs that parents face in transporting their children to private schools, which stem from differences in the quality of the local transportation infrastructure. We find evidence to suggest that religious private schooling reduces involvement in the most consequential risky behaviors such as teen sexual activity, arrests, and use of hard drugs (cocaine), but not drinking, smoking and marijuana use. KW: Juvenile justice; Juvenile delinquency; Language: en
Bias in dynamic panel models under time series misspecification

Abstract We consider within-group estimation of higher-order autoregressive panel models with exogenous regressors and fixed effects, where the lag order is possibly misspecified. Even when disregarding the misspecification bias, the fixed-effect bias formula is quite different from the correctly specified case though its asymptotic order remains the same under the stationarity. We suggest bias reduction methods under the possible time series misspecification.
Aspire or Expire: Super-Adaptable Agents and Problematic Innovation

Humans are unique as a species because, with the help of well-defined problematics, humans alone are capable of redefining reality. A problematic can be understood as an exceptionally-challenging intellectual objective (e.g., heavier-than-air flight, building the first atomic bomb, curing disease, landing humans on the moon, developing artificially-intelligent computers, constructing faster-than-light speed spacecraft , etc.) that requires knowledge-seekers to invent new facts and redefine reality in order to achieve the hoped-for objective. Although scientists prefer to think that scientific inquiry is constrained to an exploration of empirical facts, in truth, scientific progress is often instigated more effectively by the pursuit of a compelling problematicâ€”in many cases, even by science fiction fantasies (Shatner, 2002)â€”rather than by an examination of established empirical facts (McGettigan, 2011). As such, science has proven to be the most effective means ever invented by humans to transform fantasies into reality.
Degrees of Freedom in the Social World: Towards a Systems Analysis of Decision

THOMAS SCHELLING taught us that in ordinary human affairs, con ict and common interest are ubiquitously intertwined.1 For when it comes to variety, the occasion of pure con ict (known to some of its friends as the zerosum game) is as under-represented in human affairs as the occasion of undiluted common interest (known as the pure coordination game). The undiluted extremes are the exceptions, when it comes to counting kinds, while the mixed-motive kind of occasion is the rule. Things look a bit different, however, when one looks at sheer numbers of true-life occasions, as I will explain. Schelling also taught us that in the diverse space of mixed-motive affairs, intermediate between pure con ict and pure coordination, there is more true-life collaborative behaviorÐmore trustings and promise-keepingsÐthan our prescriptive decision theories can accommodate, never mind explain. This collaborative behavior, as long ago another ThomasÐThomas HobbesÐwas painfully aware, requires some explaining precisely because of the presence of ineliminable con ict of interest. The problem confronting those who aspire to explain such collaboration is to identify weighty motivations in its favor, in the face of the weighty, but countervailing motivations. What shall concern me here is not the collaboration that transpires in the face of con ict of interest, but the success which meets us more than halfway in those limiting cases of pure coordination, so as (for example) not to collide in roadways and corridors. For in sheer quantity, the occasions for pure coordination outnumber the occasions for anything else perhaps a hundredfold. We The Journal of Political Philosophy: Volume 7, Number 4, 1999, pp. 453±477
From Orphans to Families in Crisis: Parental Rights Matters in Maine Probate Courts

This Article examines the sources of the contemporary problems associated with the adjudication of parental rights matters in Maine’s probate courts and identifies specific reforms to address both the structural and substantive law problems. The Article first reviews the development of Maine’s probate courts and their jurisdiction over parental rights matters. It traces the expansion of jurisdiction over children and families from a limited role incidental to the administration of a decedent’s estate to the current scope: a range of matters that may result in the limitation, suspension, or termination of the rights of living parents. Maine probate courts now adjudicate questions implicating parental rights in a wide range of scenarios. However, the basic structure of Maine’s probate courts has remained unchanged since 1855. Maine law assigns exclusive jurisdiction of these often complex and contentious matters to a non-centralized group of county-based courts, each of which has limited resources and a single, part-time elected judge who usually has a busy law practice as his or her primary job. The Article provides a close examination of the central issues involved in the parental rights matters currently adjudicated in the probate courts under the Maine Probate Code. It analyzes the challenges presented by the probate courts’ exclusive jurisdiction of these matters, including the incidence of conflicts and confusion when the Maine District Court has addressed a parental rights issue involving a child who is also the focus of a probate court proceeding, as well as the limitations presented by the probate courts’ structure and operation. Finally, the Article discusses potential reforms aimed at improving the adjudication of parental rights matters under the MPC, including eliminating the “split jurisdiction” between probate and district courts, structural changes to probate courts to ensure fairness and due process for all participants, and a substantive reforms to the MPC provisions concerning parental rights so that the law will better reflect the contexts in which these cases arise today and address the needs of the families involved in these cases. Combined, these proposed reforms would mitigate the acute problems described in the Article to better serve both the courts that must adjudicate these difficult cases and the families at the center of them.
Currency, credit, confidence and bubbles

The popular media suggest that the Federal Reserve is ‘all powerful’ in determining things like interest rates and inflation, but this is not true. The Fed controls currency and reserves – imperfectly – but the money supply is determined by the numerous decisions of borrowers and lenders to expand credit. Thus, the Fed can try to pump reserves into the financial system, but it will not result in an expansion of any monetary aggregates. Monetary policy can also lead to price bubbles. When people think of money and inflation, they usually think about inflation in goods prices. This stems from the quantity theory of money that treated the number of transactions taking place as being proportional to goods and services produced. That may have been appropriate for a society in which most transactions were indeed for goods and services, but today, the transactions for real estate and securities dwarf the transactions for goods and services. This means that the quantity theory of money needs to be rethought, and ...
Corrupt and Unequal, Both

Rick Hasen has presented the issue of money in politics as if we have to make a choice1: it is either a problem of equality or it is a problem of corruption. Hasen’s long and influential career in this field has been a long and patient struggle to convince those on the corruption side of the fight (we liberals, at least, and, in an important sense, we egalitarians too) to resist the temptation to try to pass—by rendering equality arguments as corruption arguments, and to just come out of the closet. Hasen had famously declared that the corruption argument supporting Austin v. Michigan Chamber of Commerce2 was a fake3 and that the only basis for justifying the ban on corporate spending in Austin was equality, not corruption.4 And the U.S. Supreme Court famously (in our circles at least) agreed,5 in the process of striking down the ban on corporate spending in Austin and everywhere else.6 Thus, Hasen argues, it is a fool’s errand to fake the corruption argument. We need instead, Hasen has constantly counseled, a bit of egalitarian pride. Be true to ourselves, Hasen tells us, and give up the pretense of corruption talk. But as much as I admire Hasen’s persistence and increasing passion— and I have a privileged perspective in this because I have had the pleasure of reading his forthcoming Plutocrats United,7 a book that will certainly mark him as the dean of this field—I think that he has presented us with a false dichotomy. It is not either corruption or equality. It is both. Our current system for funding campaigns is corrupt, but it is corrupt precisely
Do Switching Costs Make Markets Less Competitive

Abstract The conventional wisdom in economic theory holds that switching costs make markets less competitive. This article challenges this claim. The authors formulate an empirically realistic model of dynamic price competition that allows for differentiated products and imperfect lock-in. They calibrate this model with data from frequently purchased packaged goods markets. These data are ideal in the sense that they have the necessary variation to identify switching costs separately from consumer heterogeneity. Equally important, consumers exhibit inertia in their brand choices, a form of psychological switching cost. This makes the results applicable to the broad range of products that are distinctly identified (i.e., branded) rather than just to products for which there is a product adoption cost or explicit switching fee. In the simulations, prices are as much as 18% lower with than without switching costs. More important, equilibrium prices do not increase even in the presence of switching costs that...
Foreign Listing Location: A Study of MNCs and Stock Exchanges in Eight Countries

This study aims to enhance our understanding of multiple listings by addressing the where question related to foreign listings. It examines factors that influence firms' choices of foreign stock exchanges. Based on a sample of 459 internationally traded MNCs, with at least one foreign listing on one of nine major stock exchanges (in eight countries) at year-end 1992, we find strong evidence that foreign listing locations are significantly influenced by 1) financial disclosure levels, and 2) the level of exports to a given foreign country.