cssi/SciSciGPT-SciSciNet huggingface dataset:
Measuring the performance of large-scale combinatorial auctions: a structural estimation approach

The main advantage of a procurement combinatorial auction (CA) is that it allows suppliers to express cost synergies through package bids. However, bidders can also strategically take advantage of this flexibility, by discounting package bids and "inflating'" bid prices for single-items, even in the absence of cost synergies; the latter behavior can hurt the performance of the auction. It is an empirical question whether allowing package bids and running a CA improves performance in a given setting. In this paper, we develop a structural estimation approach for large-scale first-price CAs to estimate the firms' cost structure using bidding data, and we use these estimates to evaluate the performance of the auction. To overcome the computational difficulties arising from the large number of bids observed in large-scale CAs, we propose a novel simplified model of bidders' behavior based on pricing package characteristics. This simplified model uses markup restrictions that are parsimonious yet sufficiently flexible to capture strategic markup adjustments that can reduce the performance of CAs. We apply our method to the Chilean school meals auction, in which the government procures half a billion dollars' worth of meal services every year and bidders submit thousands of package bids. Our estimates suggest that bidders' cost synergies are economically significant in this application, and the current CA mechanism achieves high allocative efficiency and a reasonable procurement cost. We believe this is the first paper in the literature that empirically shows that a CA performs well in practice.
Book-tax conformity and capital structure

We examine the effect of increased book-tax conformity on corporate capital structure. Prior studies document a decrease in the informativeness of accounting earnings for equity markets resulting from higher book-tax conformity. We argue that the decrease in earnings informativeness impacts equity holders more than debt holders because of the differences in payoff structures between debt and equity investments such that increases in book-tax conformity lead to increases in firms’ reliance on debt capital. We exploit a natural experiment in the U.S. and find that firms facing an increase in required book-tax conformity increase leverage relative to other firms. We also provide evidence of an increase in the cost of equity (but not of debt) capital for firms facing an increase in required book-tax conformity, relative to control firms, and show that these increases in cost of equity capital are positively associated with an increase in leverage. Our findings are consistent with firms substituting away from equity and toward more debt in the presence of higher book-tax conformity.
Revising axis V for DSM-IV: a review of measures of social functioning.

Objective Axis V, which uses the Global Assessment of Functioning Scale in the multiaxial system of DSM-III-R, is under review for DSM-IV. This article examines what is known about axis V and selectively reviews the literature on measures of social functioning to identify potential alternatives to the Global Assessment of Functioning Scale. Method About 25 studies on the use, reliability, and validity of axis V in DSM-III and DSM-III-R are reviewed. In addition, nearly 30 measures of social functioning are reviewed and analyzed as potential substitutes for the Global Assessment of Functioning Scale. The analysis focuses on the strengths and weaknesses of each measure for assessing functioning on axis V. Results Axis V measures are modestly reliable and valid but not widely used. The authors identify and discuss two particular limitations of the Global Assessment of Functioning Scale: 1) the combination of measures of symptoms and measures of social functioning on a single axis and 2) the exclusion of physical impairments from the rating of functioning. Conclusions None of the measures of social functioning reviewed is clearly superior to the Global Assessment of Functioning Scale for use on axis V. A modified version of the Global Assessment of Functioning Scale, separating the measures of social and occupational functioning from the measures of symptoms and psychological functioning, is proposed for field testing, along with a new set of instructions permitting the rating of limitations due to both physical and mental impairments.
Nudges that should fail

Professor Sunstein (2017) discusses the possible causes for and policy implications of the failure of nudges, with special attention to defaults. Though he focuses on nudges that fail when they should succeed, Sunstein recognizes that some failures reveal that a nudge should not have been attempted to begin with. ‘Nudges that fail’, however, does not consider fully the relationship between the outcomes of nudging and their likely welfare effects, most notably neglecting the troubling case of nudges that succeed when they should fail. Hence, after clarifying the boundaries of legitimate nudging within a libertarian-paternalistic approach and noting the fourfold relationship between the efficacy of nudging and its normative desirability, this article evaluates more fully the case of failed nudges and examines the hitherto unaddressed problem of successful yet undesirable nudges. This analysis shows that the failure of nudging bears only limited diagnostic value, while the success of a nudge is even less indicative of its normative status. The article concludes with recommendations for policy-makers who wish to employ nudges that are not only efficacious, but also likely to advance the subjective well-being of the individuals they target.
Do Individuals Have Preferences Used in Macro-Finance Models? An Experimental Investigation

Recent financial studies often assume that agents have Epstein–Zin preferences—preferences that require agents to care about when uncertainty is resolved. Under this “recursive-preference” framework, the preference for uncertainty resolution is entirely determined by an agent's preferences for risk and intertemporal substitution. To test the implications of this model, this paper presents an experiment designed to elicit subject preferences on risk, time, intertemporal substitution, and uncertainty resolution. Results reveal that most subjects prefer early resolution of uncertainty and have relative risk aversion greater than the reciprocal of the elasticity of intertemporal substitution, consistent with the predictions by recursive preferences. Subjects are classified in a finite mixture model by their risk, time, and intertemporal-substitution parameters. Regression results show that types predicted by the Epstein–Zin model to prefer early resolution choose early resolution with 20%–50% higher probabili...
Applying The Rule Of Law Subjectively: How Appellate Courts Adjudicate

I search for an ability of appellate courts to apply the law. I provide the reader with an intuitive understanding of Kenneth Arrow's Impossibility Theorem, a severe mathematical proof relevant to all decision-making processes. I show its relevance for jurisprudential theory. I show how the proof has been misunderstood and underappreciated in legal thought. I then show why appellate courts cannot apply the law: since appellate courts make decisions through a group of members casting equal votes, appellate interpretations are severely limited to certain characteristics. The Arrovian result is that judges, like any group making a decision, compromise based on the power of their subjective preferences, and not on any objective application of a law. Practically, this analysis shows the most controversial cases in law are problematic and predictably irreconcilable - if not seemingly hypocritical - but there is a mathematical and inherent reason for this. The basis for the inconsistency is not necessarily insincerity or deceit by judges, nor even some contemptible strategy by those who appoint them. Rather, institutional limitations interrupt the communal aspirations of group decision-making in our courts.
New Composite Indicators for Bulgarian Business Cycle

The paper presents the creation of a new composite coincident monthly indicator for Bulgaria. The Bry-Boschan method is used to determine the turning points for the Bulgarian business cycle for the 2000-2011 period. A new composite leading indicator is also created and tested. The paper finds that the latest recession for Bulgaria had started in June 2007 and was still continuing by March 2011. The national business cycle was lagging the Euro Area cycle before 2007 and was early after that.
Indonesia's Macroeconomic and Trade Performance

Indonesia's remarkable macroeconomic and trade performance in the 1970s and 1980s has motivated comparison with the established Asian tigers and has provided strong evidence for economic-reform contributions to export-led growth. ' In the 1970s, the Indonesian government took several largely unprecedented steps among developing countries, such as permitting free capital convertibility and implementing a major exchange rate devaluation to prevent Dutch Disease. During the 1 980s, this OPEC member and major international debtor faced severe world oil price, exchange rate, and interest rate shocks. Sensible policy changes and the promotion of nonoil exports prevented Indonesia from defaulting on its foreign debt obligations and from sliding into macroeconomic instability. This paper examines the links between Indonesia's growth, debt, and trade performances from 1970 to 1990 and compares Indonesia's macroeconomic performance to that of other Asian and debtor countries. While the development literature provides ample discussion of Indonesia's impressive export and economic growth performances,2 several puzzles remain. How much of Indonesia's rapid foreign debt accumulation actually financed current account deficits, and what share financed speculative short-term capital outflows? How much did the private sector contribute to strong investment growth in the 1980s? The salient analytical contribution of this paper lies in its decomposition analysis of Indonesia's external debt and domestic savings. The decompositions shed light on the puzzles and offer a closer scrutiny than previous studies of how Indonesia diversified the structural financing of its economic growth. The paper first examines Indonesian macroeconomic performance from 1970 to 1990 in three subperiods with endpoints generated by trends in oil prices and
Systemic Risk and Managerial Incentives in the Dodd-Frank Orderly Liquidation Authority

Neither the FDIC’s recently announced resolution policy for failed financial institutions nor academic studies on systemic risk address the micro-level managerial incentives resulting from the Dodd-Frank Orderly Liquidation Authority’s incapacity to respond to simultaneous balance-sheet insolvency rather than temporary illiquidity. By holding correlated asset portfolios and serving as counterparties to similarly situated financial institutions, managers can strategically increase the likelihood of a government bailout rather than receivership under the OLA. Three case studies—Lehman Brothers, AIG, and large European banks’ response to the 2011 bail-in proposals—demonstrate the implications of the OLA’s shortcomings and the inadequacy of the FDIC’s approach. In light of these strategic incentives, the FDIC should modify its intervention policy to respond effectively to illiquidity-driven systemic risk and prudential regulators should work to reduce the likelihood of correlated balance-sheet insolvency.
CORPORATE CONTROL AND THE POLITICS OF FINANCE

In this paper I explore the effects of politics on corporate finance, including the determinants of capital structure and the regulatory and legal factors governing the market for corporate control. I examine the effects and consequences of the active corporate control market of the 1980s, then I outline the enormous political controversy and inaccurate media portrayals that ensued, and contrast them to the results obtained from intensive study of the phenomena by academic economists. First, I review new macroeconomic evidence on changes in productivity in American manufacturing that is dramatically inconsistent with popular claims that corporate control transactions were crippling the industrial economy in the 80s. Second, I show how the restructuring movement of the 1980s reflected the re-emergence of active investors in the U.S. and how restructuring addressed the conflict between management and shareholders over control of corporate free cash flow. Third, I summarize my conception of LBO associations as new organizational forms that overcome the deficiencies of large public conglomerates. I also discuss the similarity between LBO associations and Japanese business financing networks known as keiretsu. Fourth, I argue that the highly-leveraged financial structures of the 1980s should lead to a Japanese-style privatization of bankruptcy (i.e., out-of-court reorganization). Fifth, I present a theory of boom-bust cycles in venture markets that explains why many companies involved with late-1980s leveraged transactions encountered financial distress. Sixth, I argue that misguided changes in the tax and regulatory codes and in bankruptcy court decisions have distorted the normal economic incentives for out-of-court reorganizations, resulting in increased costs of financial distress and a sharp rise in the number of Chapter 11 filings. Seventh and last, I propose a set of changes in the Chapter 11 process designed to reduce the costs of financial distress and thus maximize the total value of the firm to all investors.
Memory and Anticipation

The introduction of memory imperfections into models of economic decision making creates a natural role for anticipatory emotions. Their combination has striking behavioural implications. The paper first shows that agents can rationally select apparently dominated strategies. We consider Newcomb's Paradox and the Prisoners’ Dilemma. We provide a resolution for Newcomb's Paradox and argue it requires the decision maker to ascribe only a tiny weight to anticipatory emotions. For some ranges of parameters, it is possible to obtain cooperation in the Prisoners’ Dilemma with probability arbitrarily close to unity. The second half of the paper provides a theory of reminders.
Job Security Without Equality: The Family and Medical Leave Act of 1993

This piece reevaluates the passage and implementation of the Family and Medical Leave Act (FMLA) against the egalitarian ideal described by the Supreme Court in its recent decision in Nevada Department of Human Resources v. Hibbs. The Court in Hibbs upheld the FMLA against an Eleventh Amendment challenge, concluding that Congress enacted the law as a congruent and proportional remedy to the longstanding history of state-sponsored discrimination against working women. According to the Court, Congress enacted the FMLA to remedy a longstanding history of discrimination against working women by forcing employers to offer caretaking leave on gender-neutral terms. At least in theory, this mandate would mean that men and women would then take leave and share the burden of caring for children on equal terms, employers would perceive male and female employees as equally (un)attractive, and women would achieve equality both as parents and as workers. In fact, as the article demonstrates, the assumptions underlying this vision of equality do not accurately reflect the reality of either caretaking or leavetaking. Members of Congress were concerned very little with equality when they debated the FMLA over the course of eight years, and the motivation for its passage was the protection of "motherhood" - giving childbearing women greater job security. Neither supporters nor opponents envisioned that men would assume greater caretaking responsibilities because of the law, and, in fact, they have not. Leave-taking patterns, and the caretaking patterns that underlie them, continue to be quite gendered. Women tend to take leave whether they have job security or not; men tend not to take leave even if they do; and employers continue to perceive women as less reliable and more costly workers. The article thus concludes, drawing on anti-subordination theory, that the FMLA did almost nothing to advance true equality for women as workers or as parents.
The wealth effects of company initiated management changes

Abstract The essence of corporate control includes the hiring and firing of key managers. We examine changes in equity values when the Board of Directors appoints and dismisses top-level managers. The evidence suggests that management changes signal shifts in company policy and raise shareholder wealth, internal promotions confirm the soundness of investment by large companies in firm-specific human capital while external appointments do not, promotions occur more often than external appointments but decline in importance as firm size decreases, and dismissal is not a favored means to handle managerial underperformance but is associated with stock price increases when used.
Churches, Politics, and the Charitable Contribution Deduction

Churches often bear the burden of the Internal Revenue Code's electioneering prohibition without their contributors enjoying the benefit of a tax deduction. Although contributions to religious congregations may be deducted, t ►a ►y, perhaps most of them, are not because many of those who give to churches do not itemize their income tax deductions. In the past two years, Congress has had before it several bills that would permit nonite ► izing taxpayers to deduct their charitable contributions. This Article argues that, extending the deduction to nonitemizers raises important issues of tax policy that should concern religious organizations. The author contends that religious congregations will benefit from considering some of the difficult questions about the relationship of the charitable contribution deduction to the standard principles of tax policy. If they do, they might support either a deduction only above a floor or a charitable contribution credit rather than a 100% deduction for nonitemizers. Congress has explained the prohibition on Internal Revenue Code section 501(c) (3) 1 organizations including churches, from engaging in electioneering2 on the grounds that it "reflects a Congressional policy that the U.S. Treasury should be neutral in political affairs." The variety of exempt organizations that can engage in electioneering while remaining tax-exempt undermines this ration* John E. Anderson Professor of Tax Law and Director, Tax LL.M. Program, Loyola Law School, Ann Hashisaka,,Jerenty Shortell and Erica .1(mes provided valuable research assistance. All references are to the Internal Revenue Code of 1986, as amended, unless otherwise indicated. 2 Section 501(c)(3) of the Internal ReVCIIIIC Code requires of the organization as a condition for exemption that "no substantial part" of its activities consist of "carrying on propaganda, or otherwise attempting, to influence legislation" and that it "not participate in, or intervene in (including the publishing or distributing of statements), any poliiical campaign on behalf of (or in apposition to) any candidate for public office." I.R.C. § 501(c) (3). I shall refer to the fist onidition as a limit on lobbying and the second as a prohibition on electioneering. 5 H.R. REP, No. 100-391 (II), al 1025, 1027 (1987), reprinted in 1987 2313-1.
The limits of reputation on compliance

This short paper is a response to Andrew Guzman's book, How International Law Works. Guzman presents a novel synthesis of the IR approaches to IL by arguing that a state's concern with its reputation is one most important source of compliance with international law. But the book's approach to reputation is not up to the task of explaining compliance. In discussion the book's shortcomings, I ask to whom the relevant reputation belongs. Guzman relies on notions of the state's reputation, but this assignment is a problem for a causation analysis because governments (who make the compliance decisions) will not fully internalize the state's reputation. In addition, I discuss the methodological problems in Guzman's approach. The book provides for only a very loose means of assessing reputational costs, even as a conceptual matter. Without such means of assessment, any claim about the power of reputation remains non-falsifiable and therefore has less theoretical force.
The interest group origins of the Bank of France

This paper contrasts different interpretations of the creation of the Bank of France. I argue that the Bank of France was the product of rent-seeking behavior rather than the pursuit of public interest, as is commonly supposed. I explain how the changing institutional constraints faced by both politicians and bankers can account for changes in France’s monetary constitution. The creation of the Bank in 1800 followed the fall of the Directory and the establishment of Napoleon’s autocratic regime. I argue that as parliamentarism and the separation of powers were weakened by Napoleon, the cost of establishing and maintaining a monopoly privilege in banking evaporated and the creation of the Bank of France became more likely.
Administrative Law Pragmatism

This is a slightly edited version of a speech that was written for a lay audience. It explains in simple terms the theme of “administrative law pragmatism” that runs through much of the author’s past scholarship. That concept can be defined as a belief in trying to accomplish social ends effectively through the use of the administrative process, although it also presupposes the availability of traditional checks on administrative power. The speech discusses FDA v. Brown & Williamson Tobacco Corp. as a concrete illustration of a situation in which the Court might have relied on this concept but did not do so. The speech makes a case for administrative law pragmatism but acknowledges that its premises are, and will remain, contested.
Residential Fixed Investment and the Macroeconomy: Has Deregulation Altered Key Relationships?

Financial deregulation in 1980 potentially altered key relationships between residential fixed investment (RFI) and key macroeconomic variables. This study uses a vector error correction model to examine relationships between RFI, money, interest rates, and output in pre-deregulation and post-deregulation sub-periods. Results indicate short-term interest rate shocks account for much of RFI variability pre-deregulation. After deregulation, long-term FHA interest rate shocks better account for RFI movements. Results also show that, in the post-deregulation era, RFI shocks have increased predictive power for overall gross domestic product movements. Thus, the study finds altered relationships between RFI and macroeconomic variables.
Spectral analysis of fractionally cointegrated systems

Abstract Fractional cointegration imposes restrictions on the zero-frequency behavior of a time series. In a multivariate time series, integrated of order d∈(1/2,3/2) and cointegrating to order d−b∈(−1/2,1/2), we derive these restrictions in terms of the (reduced) rank of the spectral density matrix of the dth differenced series and in terms of gain, coherence, and phase measures.
System Controls Reliability and Assessment Effort

This study investigates whether internal control reliability affects information system audit hours and fees. Based on archived workpaper data from 60 clients of an international auditing firm we provide quantifiable evidence that well-designed internal controls that are in place and operating effectively lead to decreased information system control assessment effort and lower assessment fees. The information system audit fee savings we document may be considered a significant benefit by companies determining the merit of an investment in information system controls.
The Effects of the “Vanishing Trial” on Our Incarceration Rate

This article focuses on the relationship between two troubling features of the American criminal justice system over the last forty years: the steep rise in our incarceration rate and the sharp decline in the number of criminal trials. The article contends that the lack of a strong trial system for routine cases pushes the incarceration rate higher.To provide perspective on our problems, the article looks at the criminal trial systems in Canada and England and shows how the availability of a nonjury trial model for misdemeanors and most felonies encourages prosecutors to keep charges low by offering advantages to both prosecutors and defendants if they opt for the nonjury trial model. There is thus not the need for the extreme pressures one sees exerted on defendants in the United States to force them to plead guilty.This article argues that it was a mistake for the Supreme Court to insist that trials for misdemeanors and most felonies must be jury trials. The result is a worse world for defendants as plea bargaining has come to dominate so completely that trials no longer serve their function as a check on the quality and quantity of cases being filed. The article concludes that we will struggle to lower our incarceration rate significantly until we face up to the problems inherent in identifying fair trials with jury trials. It is a mistake other common law countries have not made and they are better for it.
Mandarin Chinese: An Annotated Bibliography of Self-Study Materials

The People's Republic of China is currently the seventh largest economy in the world and is projected to be the largest economy by 2050. Commensurate with its growing economic power, the PRC is using its political power more frequently on the world stage. As a result of these changes, interest in China and its legal system is growing among attorneys and academics. International law librarians similarly are seeing more researchers interested in China, its laws and economy. The principal language of China, Mandarin Chinese, is considered a difficult language to learn. The Foreign Service Institute has rated Mandarin as “exceptionally difficult for English speakers to learn.” Busy professionals such as law librarians find it very difficult to learn additional languages despite their usefulness in their careers.
Challenges to Environmental Law

This paper is a dinner speech that briefly reviews some challenges to modern environmental law orthodoxy and how they might be responded to.
Defending the Possibility of a Neutral Functional Theory of Law

I argue that there is methodological space for a functional explanation of the nature of law that does not commit the theorist to a view about the value of that function for society, nor whether law is the best means of accomplishing it. A functional explanation will nonetheless provide a conceptual framework for a better understanding of the nature of law. First I examine the proper role for function in a theory of law and then argue for the possibility of a neutral functional theory, addressing issues raised by Leslie Green, Stephen Perry, Michael Moore and John Finnis.
Does Culture Pay? Evidence from Crowdsourced Employee Engagement Data

Corporate culture is increasingly important for retention and employee motivation. First, using a new survey tool with PayScale.com, I show that culture is strongly correlated with employee engagem...
No Pay, No Gain? The Plus Side of Unpaid Internships

Recent cases out of the Southern District of New York have shined a spotlight on the phenomenon that is the unpaid internship with for-profit companies. These rulings, awaiting scrutiny by the Second Circuit, have opened the floodgates for countless interns to challenge their “employers” for the minimum wage they may be owed under the Fair Labor Standards Act (FLSA). This article examines the evolution of testing for employment under the FLSA, which varies greatly among the circuits. It then argues for a limited exception to the FLSA inspired by the “small business exception” to the Affordable Care Act.Part II of this article tracks the development of varying tests used by courts to determine if someone is an employee under the FLSA, including the Department of Labor's Six Factors, Economic Realities, Primary Beneficiary, and a Balancing Test. A caveat to this examination is none of these tests were originally developed with internships in mind, nor were they created in a vacuum. Each test that will be discussed was created by a court with a certain set of facts in front of it. While each court ultimately decided its test was the appropriate one, attention must be paid to the underlying situation. Part III will examine the treatment of unpaid internships in the courts today. More specifically, it will examine two recent cases out of the Southern District of New York: Xuedan Wang v. The Hearst Corporation and Glatt v. Fox Searchlight Pictures, Inc. Finally, Part IV will discuss the effect of unpaid internships on both education and the labor market. This article will then propose a narrow exception to the FLSA wherein a small business may hire short-term unpaid interns. This proposed exception was inspired by and is derived from the Affordable Care Act.
PROFESSOR RABIN AND THE ADMINISTRATIVE STATE

This article contributes to a festscrifft honoring Professor Robert Rabin and focuses on his contributions to our understanding of the administrative state. It considers all of his articles bearing on this subject and emphasizes five themes in this work: the need for empiricism in administrative state scholarship; (2) the importance of informal, nonlegal aspects of the administrative process; (3) the dilemma of administrative discretion; (4) the historical evolution of the administrative state; and (5) the need to balance competing values in administration. Finally, I criticize Rabin's normative assessment of the administrative state insofar as he insists that it lacks "coherence." I conclude that Rabin's exemplary work teaches us that the larger principles of justice and policy that must underwrite our assessments of the administrative state and its reform "will always be multiple, conceptually ambiguous, politically contested, and compromised in their implementation. To that extent, they will be incoherent. So much the better for democracy."
Aggregate fluctuations from independent sectoral shocks: self-organized criticality in a model of production and inventory dynamics

Abstract This paper illustrates how fluctuations in aggregate economic activity can result from many small, independent shocks to individual sectors. The effects of the small independent shocks fail to cancel in the aggregate due to the presence of two non-standard assumptions: local interaction between productive units (linked by supply relationships), and non-convex technology. We also argue that neither feature on its own would suffice. In the case of a simple model, we explicitly calculate the distribution of aggregate activity in the limit of an infinite number of independently disturbed sectors.
Crafting an Asbestos Scheduled Compensation Solution for Louisiana and the Nation

Asbestos litigation is the single largest mass tort claim in U.S. history. The costs of asbestos litigation have left corporations without assets, plaintiffs without compensation, and attorneys with hearty bank accounts. While reforms have been proposed, they do not adequately solve the asbestos litigation.Recently, the Louisiana Supreme Court, in Rando v. Anco Insulations Inc., held that all mesothelioma claims must be litigated in the tort system as opposed to the Louisiana Workers' Compensation system and created the risk of greater asbestos litigation within its borders. This article attempts to craft a solution to Louisiana's impending asbestos litigation crisis by advocating a state-administered scheduled compensation system for asbestos injury claims based on the Fairness in Asbestos Recovery Act of 2006 and the Louisiana Medical Malpractice statute.
Endogenous pricing to market and financing costs

Abstract This paper explains why relative PPP should hold more tightly in emerging markets, and why pricing to market would be observed more frequently in the OECD countries. It studies the endogenous determination of pricing to market, in a real option model with time-dependent transportation costs, where the future terms of trade are random. Allowing time-dependent transportation costs adds a dimension of investment to the pre-buying of imports, implying that financial considerations determine the frequency of pricing to market, and the deviations from relative PPP. If the expected discounted cost of last minute delivery is higher than pre-buying, one exercises the option of spot market imports if the realized terms of trade are favorable enough. Pricing to market is observed in countries characterized by low terms of trade volatility and low financing costs. In these circumstances, imports are pre-bought, and the spot market for imports is inactive. In countries where the financing costs and the terms of trade volatility are high, few imports are pre-bought, the price of imports is determined by the realized real exchange rate, and a version of relative PPP holds. With an intermediate level of terms of trade volatility and of financing costs, a mixed regime is observed. If the realized real exchange rate is weak, pricing to market would prevail, increasing consumers’ welfare by shielding them from the adverse purchasing power consequences of weak terms of trade. If the realized real exchange rate is favorable enough, more imports are purchased in the spot market, and the relative PPP would hold. Higher financing costs increase the cost of pre-buying imports, reducing thereby the frequency of pricing to market, increasing the expected relative price of imports, reducing the expected deviations from relative PPP, and reducing welfare.
How Strictly Scrutinized?: Examining the Educational Benefits the Court Relied Upon in Grutter

In Grutter v. Bollinger, the Court recognized student body diversity as a compelling state interest that justified the use of racial preferences in selecting applicants for admission to public university law schools. Normally, any state action reviewed under a strict scrutiny approach is destined for invalidation. But in Grutter, the Court bucked the trend and upheld the race-based admissions policy against a racial discrimination challenge brought under the Fourteenth Amendment's equal protection clause.Given the rarity of a state action surviving strict scrutiny review, it is instructive to examine the nature of the diversity interest recognized by the Court in Grutter, especially since it is a diversity that seems to completely transform the way strict scrutiny is applied. Instead of rigorously examining the stated purposes and aims of the racial discrimination at issue, the Court appeared to give great deference to whatever goals and justifications the government offered. The Court did not, as it so often does in other applications of strict scrutiny, conduct an independent, skeptical inquiry into the stated rationales for the government's action; nor did the Court seriously consider whether the government failed to pursue other less discriminating alternatives that would have produced the same desired racial diversity among its students; nor did the Court engage in any real effort to determine whether the government had even established a sufficient trustworthiness in matters of diversity so as to be rewarded with such deference.This Article will examine the nature of the diversity interest recognized in Grutter. It will ask the questions that courts normally ask during a strict scrutiny review, but which Grutter failed to ask. And in doing so, this Article will question whether higher education, in connection with the issue of diversity, should be given the deference that the Court granted it.
Parents' Self-Determination and Children's Custody: A New Analytical Framework for State Structuring of Children's Family Life

When adults exercise basic liberties, such as freedom of speech, association, or travel, their actions can adversely impact any child in their custody. In several topical areas of family and juvenile law, the prevailing view among courts and scholars is that the self-determination rights and interests of adults who happen to be parents trump or, at a minimum, must be balanced against the interests of their children, so that sometimes children’s welfare must be sacrificed for the sake of parents’ self-determination. This Article demonstrates that this view is mistaken, and that any deference to parents’ self-determining interests or supposed rights is inappropriate in resolving custody disputes between parents or between a parent and the state. The constitutional and normative analysis that ordinarily applies when the state constrains individual liberty is inapt in situations where the state acts as a proxy decision-maker for private individuals, and this Article shows that this is how we must view the state’s actions when courts and agencies decide with whom children will live. In such cases, it is inappropriate for state actors directly to consider the interests of anyone other than the children themselves.
Vioxx's history and the need for better procedures and better testing.

After it was put on the market, Vioxx, a popular and widelyadvertised arthritis drug, was found to have cardiovascular risks. It took fourteen months of intense negotiation before a warning was added to the labeling, which cautioned about use by those with heart disease and the “unknown” significance of study findings. When a later study confirmed the risk, Merck, the drug maker, withdrew the drug voluntarily from the market. The finding of such a serious risk after the drug was on the market and the time it took for a warning to be given, led to a loss of public confidence in the agency and a debate about the regulatory system. At the agency’s request, the Institute of Medicine (IOM) of the National Academy of Sciences studied the agency’s regulatory system and issued a report (“IOM Report”) on the future of drug safety, recommending legislative and regulatory changes based on a “vision of a transformed drug safety system” that has “at its core a Lifecycle approach to drug risks and benefits.”
Oligopolistic Competition, Technology Innovation, and Multiproduct Firms

Firms’ proliferation behavior in a differentiated product market is studied using an oligopolistic competition model with multiproduct firms. The model has the following characteristics: (1) the elasticity of substitution across firm's own products and the elasticity of substitution across different firms are allowed to differ; (2) the product managers of the same firm behave cooperatively rather than independently; (3) the number of firms is determined by a free-entry condition and so is endogenous. If the elasticity of substitution across the firm's own products increases, it is shown that the firm proliferates less and the number of firms in the market increases. If the elasticity of substitution across different firms increases, firms proliferate more and the number of firms in the market decreases.
An Investigation of Analysts' Praise of Management During Earnings Conference Calls

ABSTRACTThrough the textual analysis of a large sample of earnings conference calls, the authors find that analysts praise management on over half of earnings conference calls by saying complimentary phrases such as “congratulations on the great quarter.” The results show that analysts' complimentary phrases reflect the nature of the information released at the earnings announcement. The authors find that the amount of praise by analysts on an earnings conference call is strongly associated with the earnings surprise and to a greater extent the earnings announcement stock return. They also find that there is value to investors in tracking analysts' flattery of management during earnings conference calls, as it predicts abnormal stock returns over the following quarter. The findings, which are incremental to prior research on the tone of earnings conference calls, highlight a previously ignored aspect of analyst feedback.
Overvaluation and the Choice of Alternative Earnings Management Mechanisms

ABSTRACT In this study I examine how the degree and duration of overvaluation affect management's use of alternative within-GAAP earnings management, restrictions on further exploitation of within-GAAP accruals management, and subsequent non-GAAP earnings management. Further, I examine how one type of earnings management segues into another type as overvaluation persists. I present evidence that the longer the firm is overvalued, the greater is the amount of total earnings management. I also find that managers engage in accruals management in the early stages of overvaluation before moving to real transactions management, in order to sustain their overvalued equity. Finally, I find that the longer a firm is overvalued, the more likely it is to engage in one of the most egregious forms of earnings management, non-GAAP earnings management. Collectively, the results suggest that the duration of firm overvaluation is an important determinant of managements' choice of alternative earnings management mechanisms...
Fairness Perception from a Network-Centric Perspective

Algorithmic fairness is a major concern in recent years as the influence of machine learning algorithms becomes more widespread. In this paper, we investigate the issue of algorithmic fairness from a network-centric perspective. Specifically, we introduce a novel yet intuitive function known as fairness perception and provide an axiomatic approach to analyze its properties. Using a peer-review network as a case study, we also examine its utility in terms of assessing the perception of fairness in paper acceptance decisions. We show how the function can be extended to a group fairness metric known as fairness visibility and demonstrate its relationship to demographic parity. We also discuss a potential pitfall of the fairness visibility measure that can be exploited to mislead individuals into perceiving that the algorithmic decisions are fair. We demonstrate how the problem can be alleviated by increasing the local neighborhood size of the fairness perception function.
Bond indifference prices

In a market with stochastic interest rates, we consider an investor who can either (i) invest all of his wealth in a money market account or (ii) purchase zero-coupon bonds and invest the remainder...
Modeling effectiveness of testing strategies to prevent COVID-19 in nursing homes -United States, 2020.

Background SARS-CoV-2 outbreaks in nursing homes can be large with high case fatality. Identifying asymptomatic individuals early through serial testing is recommended to control COVID-19 in nursing homes, both in response to an outbreak ("outbreak testing" of residents and healthcare personnel) and in facilities without outbreaks ("non-outbreak testing" of healthcare personnel). The effectiveness of outbreak testing and isolation with or without non-outbreak testing was evaluated. Methods Using published SARS-CoV-2 transmission parameters, the fraction of SARS-CoV-2 transmissions prevented through serial testing (weekly, every three days, or daily) and isolation of asymptomatic persons compared to symptom-based testing and isolation was evaluated through mathematical modeling using a Reed-Frost model to estimate the percentage of cases prevented (i.e., "effectiveness") through either outbreak testing alone or outbreak plus non-outbreak testing. The potential effect of simultaneous decreases (by 10%) in the effectiveness of isolating infected individuals when instituting testing strategies was also evaluated. Results Modeling suggests that outbreak testing could prevent 54% (weekly testing with 48-hour test turnaround) to 92% (daily testing with immediate results and 50% relative sensitivity) of SARS-CoV-2 infections. Adding non-outbreak testing could prevent up to an additional 8% of SARS-CoV-2 infections (depending on test frequency and turnaround time). However, added benefits of non-outbreak testing were mostly negated if accompanied by decreases in infection control practice. Conclusions When combined with high-quality infection control practices, outbreak testing could be an effective approach to preventing COVID-19 in nursing homes, particularly if optimized through increased test frequency and use of tests with rapid turnaround.
Alchemical transformations for concerted hydration free energy estimation with explicit solvation

We present a family of alchemical perturbation potentials that enable the calculation of hydration free energies of small- to medium-sized molecules in a single concerted alchemical coupling step instead of the commonly used sequence of two distinct coupling steps for Lennard-Jones and electrostatic interactions. The perturbation potentials we employ are non-linear functions of the solute-solvent interaction energy designed to focus sampling near entropic bottlenecks along the alchemical pathway. We present a general framework to optimize the parameters of alchemical perturbation potentials of this kind. The optimization procedure is based on the λ-function formalism and the maximum-likelihood parameter estimation procedure we developed earlier to avoid the occurrence of multi-modal distributions of the coupling energy along the alchemical path. A novel soft-core function applied to the overall solute-solvent interaction energy rather than individual interatomic pair potentials critical for this result is also presented. Because it does not require modifications of core force and energy routines, the soft-core formulation can be easily deployed in molecular dynamics simulation codes. We illustrate the method by applying it to the estimation of the hydration free energy in water droplets of compounds of varying size and complexity. In each case, we show that convergence of the hydration free energy is achieved rapidly. This work paves the way for the ongoing development of more streamlined algorithms to estimate free energies of molecular binding with explicit solvation.
Freeing Racial Harassment from the Sexual Harassment Model

Judges, academics, and lawyers alike base their legal analyses of workplace racial harassment on the sexual harassment model. Legal principles derived from sexual harassment jurisprudence are presumed to be equally appropriate for racial harassment cases. The implicit assumption is that the social harms and public policy goals of racial harassment and sexual harassment are sufficiently similar to justify analogous scrutiny and remedies. Parties to racial harassment cases cite the reasoning and elements of sexual harassment cases without hesitation, as if racial harassment and sexual harassment are behaviorally and legally indistinguishable. This Article, however, questions the assumption that there should be a monolithic model for discriminatory workplace harassment. In particular, it questions whether the currently dominant sexual harassment model should be used automatically as the paradigm in racial harassment disputes. Part I begins by acknowledging and explaining why the legal community analogizes racial harassment claims and jurisprudence to sexual harassment claims and jurisprudence. Part II posits that this analogy is problematic given the fundamental differences between racial harassment and sexual harassment. While empirical evidence of these differences is currently limited, Part II identifies and discusses two pioneering examples. The first documents important dissimilarities between racial harassment litigation and sexual harassment litigation; the second chronicles the differences between the dynamics and theoretical explanations for racial harassment and sexual harassment in the law firm context. Given the dominance of the sexual harassment model and the presumption of its applicability to other harassment disputes, including racial harassment, it is not surprising that comparatively little research and study of racial harassment and other forms of harassment have been done. The discussion and analysis here contributes to the research on the topic. Finally, Part III explores the implications of freeing racial harassment from the sexual harassment model.