cssi/SciSciGPT-SciSciNet huggingface dataset:
Computerization of the Equity, Foreign Exchange, Derivatives, and Fixed-Income Markets

We survey empirical studies on the development and effects of increased computerization across equity, foreign exchange, derivatives, and fixed-income markets. While the changes in the trading process due to computerization in less liquid markets such as the corporate bond market have been modest, there have been dramatic changes in certain derivatives markets, foreign exchange, and particularly in equity markets. In many instances, previous research has found positive effects of computerization on measures of market quality, but our survey highlights that human intermediation is still prominent and beneficial in certain areas.
Racial heterogeneity and Medicaid expenditure in the U.S. States: A longitudinal analysis

Abstract This study investigates the relationship between racial heterogeneity and Medicaid spending as a share of state public expenditures in the U.S. states from 2000 to 2010. Extant studies predict that increasing racial heterogeneity reduces the share of expenditure on “productive public goods” such as health and education spending. The relationship, however, has been inadequately examined in the previous research because (1) the use of a cross-section dataset in previous research makes it difficult to draw a causal inference, (2) previous research does not sufficiently discuss the magnitude of the effect, (3) it uses aggregate expenditure data which do not distinguish between programs that benefit targeted groups vs. the general public, and (4) previous research does not take political representation bias into consideration. My paper offers the first longitudinal analysis to examine a causal effect of racial heterogeneity on Medicaid expenditure at the U.S. state level. Using state panel data from 2000 to 2010, I find that racial heterogeneity has a negative and statistically significant effect on Medicaid's share within a state's budget. The fiscal impact is also economically significant.
Start-up costs and pecuniary externalities as barriers to economic development

We use a dynamic monopolistic competition model to show that an economy that inherits a small range of specialized inputs can be trapped into a lower stage of develop- ment. The limited availability of specialized inputs forces the final goods producers to use a labor intensive technology, which in turn implies a small inducement to introduce new intermediate inputs. The start-up costs, which make the intermediate inputs producers subject to dynamic increasing returns, and pecuniary externalities that result from the factor substitution in lhe final goods sector, play essential roles in the model.
Private and Public Supply of Liquidity

This paper addresses a basic, yet unresolved, question: Do claims on private assets provide sufficient liquidity for an efficient functioning of the productive sector? Or does the state have a role in creating liquidity and regulating it either through adjustments in the stock of government securities or by other means? In our model, firms can meet future liquidity needs in three ways: by issuing new claims, by obtaining a credit line from a financial intermediary, and by holding claims on other firms. When there is no aggregateuncertainty, we show that these instruments are sufficient for implementing the socially optimal (second‐best) contract between investors and firms. However, the implementation may require an intermediary to coordinate the use of scarce liquidity, in which case contracts with the intermediary impose both a maximum leverage ratio and a liquidity constraint on firms. When there is only aggregate uncertainty, the private sector cannot satisfy its own liquidity needs. The government ca...
Legislatures, Bureaucracies, and Distributive Spending

This article develops a theory of bureaucratic influence on distributive politics. Although there exists a rich literature on the effects of institutions such as presidents, electoral systems, and bicameralism on government spending, the role of professional bureaucrats has yet to receive formal scrutiny. In the model, legislators bargain over the allocation of distributive benefits across districts. The legislature may either “politicize” a program by bargaining directly over pork and bypassing bureaucratic scrutiny, or “professionalize” it by letting a bureaucrat approve or reject project funding in each district according to an underlying quality standard. The model predicts that the legislature will professionalize when the expected program quality is high. However, politicization becomes more likely as the number of high-quality projects increases and under divided government. Further, more competent bureaucrats can encourage politicization if the expected program quality is low. Finally, politicized programs are larger than professionalized programs.
Judging from a Guilty Conscience: The Chilean Judiciary's Human Rights Turn

Since the detention of General Pinochet in London in 1998 on charges of crimes against humanity, Chile's judges have sentenced more former officials of the military regime for human rights violations than judges of any other country in Latin America. This article argues that the prosecutorial turn reflects the judiciary's attempt to atone for its complicity with the dictatorship. The London arrest created pressure for prosecution of Pinochet‐era human rights violations; but it is the contest over the judiciary's legacy, as an important piece of postauthoritarian memory struggles, that explains why Chile's notoriously illiberal judiciary ceded to that pressure. By reconceptualizing judicial culture as contested, heterogeneous, and dynamic, this article opens the door to richer understandings of judicial politics, transitional justice, and the reception of international human rights.
Tail index estimation for a filtered dependent time series

We prove Hill’s (1975) tail index estimator is asymptotically normal where the employed data are generated by a stationary parametric time series {xt(θ) : t ∈ Z} and θ is an unknown k × 1 vector. We assume xt(θ) is unobservable but θ is estimable with estimator θn and sample size n ≥ 1, and the filtered series xt(θn) is observed and used to estimate the tail index. Natural applications include regression residuals, GARCH filters, and weighted sums based on an optimization problem like optimal portfolio selection. Our main result substantially extends Resnick and Starica (1997)’s theory for estimated AR i.i.d. errors and Ling and Peng (2004)’s theory for estimated ARMA i.i.d. errors to a wide range of filtered time series since we do not require xt(θ ) to be i.i.d., nor generated by a linear process with geometric dependence. We assume xt(θ ) is β-mixing with possibly hyperbolic dependence, covering ARMA-GARCH filters, ARMA filters with heteroscedastic errors of unknown form, nonlinear filters like threshold autoregressions, and filters based on mis-specified models, as well as i.i.d. errors in an ARMA model. Finally, as opposed to Resnick and Starica (1997) and Ling and Peng (2004) we do not require θn to be super√ n-convergent when xt(θ ) has an infinite variance. We allow a far greater variety of plug-ins, including those that are slower than √ n, like QML-type estimators for GARCH models.
Publication Records of Faculty Promoted at the Top 75 Accounting Research Programs

This paper presents a descriptive analysis of the publication records of faculty promoted from 1995 to 2003 at the top 75 accounting research programs (as ranked by Trieschmann et al. 2000). The presentation and analyses of these data are designed to be useful to faculty and evaluation committees from a benchmarking and decision‐making perspective. From a benchmarking perspective, the results will be useful in helping schools as they develop or refine relevant policies and research expectations. The results may be particularly useful in view of the fact that average accounting faculty publication records differ from the average publication records of faculty in other disciplines. We present results in different ways to help faculty and evaluation committees understand faculty publication records at the time accounting faculty are promoted to associate and full professor at various sets, or portfolios, of universities. Not surprisingly, the results indicate significant differences in publication records ac...
Racial Bias in Motor Vehicle Searches: Theory and Evidence

Police checking for illegal drugs are much more likely to search the vehicles of African‐American motorists than those of white motorists. This paper develops a model of police and motorist behavior that suggests an empirical test for distinguishing whether this disparity is due to racial prejudice or to the police’s objective to maximize arrests. When applied to vehicle search data from Maryland, our test results are consistent with the hypothesis of no racial prejudice against African‐American motorists. However, if police have utility only for searches yielding large drug finds, then our analysis would suggest bias against white drivers. The model’s prediction regarding nonrace characteristics is also largely supported by the data.
Mass layoffs and unemployment

Abstract Mass layoffs give rise to groups of unemployed workers who possess similar characteristics and, therefore, may learn from one another's experience searching for a new job. Two factors lead them to exert too little effort in equilibrium. The first is an information externality: searchers fail to take into account the value of their experience to others. The second is an incentive to free ride: each worker would like others to experiment and reveal information concerning the location of productive jobs. Together these forces imply that in equilibrium the natural rate of unemployment is too high.
A Common Law Approach to D&O Insurance "In Fact" Exclusion Disputes

Directors’ and Officers’ (D&O) liability insurance policies are a staple of the modern corporate world. Held by virtually all major organizations, these policies protect their beneficiaries from losses suffered in connection with directors’ and officers’ performance of their duties. The policies fund the defense of lawsuits and reimburse policyholders for settlements and adverse judgments. Like other types of liability insurance, D&O policies do not provide universal coverage. One common exclusion—the personal profit exclusion—prevents coverage of losses caused by the insured’s wrongful conduct from which he inappropriately profited. For example, this provision would preclude coverage of a judgment against an executive for accepting kickbacks from a corporation’s suppliers. These exclusions shield insurance carriers from the significant moral hazard that would result if executives could be reimbursed for damages that arise from their illegal profiteering. They also protect organizations, as they ensure that D&O policies do not create perverse incentives for executives to engage in wrongdoing. For the executives, of course, the exclusions matter because they may strip the executives of the benefits of coverage. Personal profit exclusions generally state that they apply when executives have “in fact” profited from their conduct. This “in fact”
Homoclinic Orbits of the FitzHugh-Nagumo Equation: Bifurcations in the Full System

This paper investigates travelling wave solutions of the FitzHugh-Nagumo equation from the viewpoint of fast-slow dynamical systems. These solutions are homoclinic orbits of a three dimensional vector field depending upon system parameters of the FitzHugh-Nagumo model and the wave speed. Champneys et al. [SIAM J. Appl. Dyn. Syst., 6 (2007), pp. 663-693] observed sharp turns in the curves of homoclinic bifurcations in a two dimensional parameter space. This paper demonstrates numerically that these turns are located close to the intersection of two curves in the parameter space that locate nontransversal intersections of invariant manifolds of the three dimensional vector field. The relevant invariant manifolds in phase space are visualized. A geometrical model inspired by the numerical studies displays the sharp turns of the homoclinic bifurcations curves and yields quantitative predictions about multipulse and homoclinic orbits and periodic orbits that have not been resolved in the FitzHugh-Nagumo model. Further observations address the existence of canard explosions and mixed-mode oscillations.
MORAL DILEMMAS, COLLECTIVE RESPONSIBILITY, AND MORAL PROGRESS ∗

Ruth Marcus has offered an account of moral dilemmas in which the presence of dilemmas acts as a motivating force, pushing us to try to minimize predicaments of moral conflict. In this paper, I defend a Marcus-style account of dilemmas against two objections: first, that if dilemmas are real, we are forced to blame those who have done their best, and second, that in some cases, even a stripped down version of blame seems inappropriate. My account highlights the importance of collective responsibility in understanding dilemmas, and I suggest that it sheds light on understanding moral progress.
Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs

We investigate the frictions that impede individual investors’ use of accounting information and, in particular, their costs of monitoring and acquiring accounting disclosures. We do so using an archival setting in which individuals are presented with automated media articles that report both current earnings news and past stock returns. Although these investors have earnings information readily available, we find no evidence that their trades incorporate it. Instead we find that their trading responds to the trailing stock returns presented in the articles. Our study raises questions about the efficacy of regulations that aim to aid less sophisticated investors by increasing their awareness of and access to accounting information.
AMOUN: Asymmetric lightweight cryptographic scheme for wireless group communication

Abstract Multi-recipient cryptographic schemes provide secure communication, between one sender and multiple recipients, in a multi-party group. Providing secure multi-party communication is very challenging, especially in dynamic networks. Existing multi-recipient cryptographic schemes pose a variety of limitations. These include high computational overhead for both encryption and decryption, additional communication overhead and high setup cost due to change in membership, and collusion among recipients. In order to overcome these limitations, this paper introduces an efficient asymmetric multi-recipient cryptographic scheme, A M O U N . In the proposed scheme, to better utilize network resources, the sender transmits a ciphertext containing different messages to multiple recipients, where each recipient is only allowed to retrieve its own designated message. Security analysis demonstrates that the proposed scheme is indistinguishable under adaptive chosen plaintext attack. Quantitative analysis reveals that lightweight A M O U N shows lower average computational cost than both RSA and Multi-RSA, for both encryption and decryption, even when the key sizes are four times larger. For a given prime size, in case of encryption, A M O U N shows 98% and 99% lower average computational cost than RSA and Multi-RSA, respectively. For decryption, A M O U N shows a performance improvement of 99% compared to RSA and Multi-RSA.
A whole-cortex probabilistic diffusion tractography connectome

Abstract The WU-Minn Human Connectome Project (HCP) is a publicly-available dataset containing state-of-art structural, functional, and diffusion-MRI for over a thousand healthy subjects. While the planned scope of the HCP included an anatomical connectome, resting-state functional-MRI forms the bulk of the HCP’s current connectomic output. We address this by presenting a full-cortex connectome derived from probabilistic diffusion tractography and organized into the HCP-MMP1.0 atlas. Probabilistic methods and large sample sizes are preferable for whole-connectome mapping as they increase the fidelity of traced low-probability connections. We find that overall, connection strengths are lognormally distributed and decay exponentially with tract length, that connectivity reasonably matches macaque histological tracing in homologous areas, that contralateral homologs and left-lateralized language areas are hyperconnected, and that hierarchical similarity influences connectivity. We compare the diffusion-MRI connectome to existing resting-state fMRI and cortico-cortico evoked potential connectivity matrices and find that it is more similar to the latter. This work helps fulfill the promise of the HCP and will make possible comparisons between the underlying structural connectome and functional connectomes of various modalities, brain states, and clinical conditions. Significance Statement The tracts between cortical parcels can be estimated from diffusion MRI, but most studies concentrate on only the largest connections. Here we present an atlas, the largest and most detailed of its kind, showing connections among all cortical parcels. Connectivity is relatively enhanced between frontotemporal language areas and homologous contralateral locations. We find that connectivity decays with fiber tract distance more slowly than predicted by brain volume and that structural and stimulation-derived connectivity are more similar to each other than to resting-state functional MRI correlations. The connectome presented is publicly available and organized into a commonly used scheme for defining brain areas in order to enable ready comparison to other brain imaging datasets of various modalities.
Free the Data!: E-Governance for Megaregions:

A critical success factor for any regional or megaregion governance initiative will be the collection and synthesis of good-quality data from numerous sources on a wide range of issues. The rise of...
When Judges Are Accused: An Initial Look at the New Federal Judicial Misconduct Rules

On March 11, 2008, the Judicial Conference of the United States, the administrative policy-making body of the federal judiciary, approved the first set of nationally binding rules for dealing with accusations of misconduct by federal judges. The new rules implement recommendations made by a committee chaired by Supreme Court Justice Stephen Breyer. The Breyer Committee found that although the judiciary has been doing a very good overall job in handling complaints against judges, the error rate in high-visibility cases is far too high. The new regulatory regime comes into existence at a time when federal judges have been accused of ethical transgressions that span the spectrum of actionable misbehavior. Indeed, at least three judges face the possibility of impeachment proceedings. This article examines the newly adopted misconduct rules against the background of these recent controversies. The underlying question is the same one that Congress grappled with when it established the current statutory framework in 1980: can federal judges be trusted to investigate and impose appropriate discipline for misconduct in their ranks? The article begins with a brief account of the history that led to the promulgation of the new rules. Next, the article outlines the procedures established by Congress and the judiciary for handling allegations of misconduct by federal judges. The remainder of the article addresses the major issues raised by the new rules: the move toward greater centralization in the administration of the disciplinary system; the definition of misconduct; the possible need for greater procedural formality; the nature and timing of public disclosure; and efforts to make the process more visible.
Investment incentives and corporate tax asymmetries

Abstract Recent facts on the importance of corporate losses motivate more careful study of the impact of tax incentives for investment on firms that lose money. I model firm investment decisions in a setting featuring financing constraints and carrybacks and carryforwards of operating losses. I estimate investment responses to tax incentives allowing effects to vary with cash flows and taxable status. Results suggest that asymmetries in the corporate tax code could have made recent bonus depreciation tax incentives at most 4% less effective than they would have been if all firms were fully taxable. Cash flows have more important effects on the impact of tax incentives. Recent declines in cash flows would predict a 24% decrease in the effectiveness of bonus depreciation. Results thus suggest that tax incentives have the smallest impact on investment exactly when they are most likely to be put in place — during downturns in economic activity when cash flows are low.
Restricting the Marketing of Junk Food to Children by Product Placement and Character Selling

This Article argues that certain marketing practices — specifically product placements and the use of popular characters to promote products — are deceptive when used to market to children. It argues that such practices should therefore be prohibited by federal law and further, that such a law is consistent with the First Amendment.
The attack and defense of weakest-link networks

We experimentally test the qualitatively different equilibrium predictions of two theoretical models of attack and defense of a weakest-link network of targets. In such a network, the attacker’s objective is to assault at least one target successfully and the defender’s objective is to defend all targets. The models differ in how the conflict at each target is modeled—specifically, the lottery and auction contest success functions (CSFs). Consistent with equilibrium in the auction CSF model, attackers utilize a stochastic “guerrilla-warfare” strategy, which involves attacking at most one target arbitrarily with a random level of force. Inconsistent with equilibrium in the lottery CSF model, attackers use the “guerrilla-warfare” strategy and assault only one target instead of the equilibrium “complete-coverage” strategy that attacks all targets. Consistent with equilibrium in both models, as the attacker’s valuation increases, the average resource expenditure, the probability of winning, and the average payoff increase (decrease) for the attacker (defender).
Individual Responsibility for Mass Atrocity: In Search of a Concept of Perpetration

International criminal law lacks a coherent account of individual responsibility. This failure is due to the inability of international tribunals to capture the distinctive nature of individual responsibility for crimes that are collective by their very nature. Specifically, they have misunderstood the nature of the collective action or framework that makes these crimes possible, and for which liability can be attributed to intellectual authors and leaders. In this paper, I draw on the insights of comparative law and methodology to propose a new doctrine of perpetration that reflects the role and function of high level participants in mass atrocity while simultaneously situating them within the political and social climate which renders these crimes possible. This new doctrine is developed through a novel approach which combines and restructures divergent theoretical perspectives on attribution of responsibility in the English and German domestic criminal law systems as major representatives of the common law and civil law systems. At the same time, it harnesses social science literature to identify and capture, in doctrinal terms, the unique circumstances in which mass atrocity occurs.
Authoritarian Reversals and Democratic Consolidation

I present a new empirical approach to the study of democratic consolidation. This approach leads to new insights into the determinants of democratic consolidation that cannot be obtained with existing techniques. I distinguish between democracies that survive because they are consolidated and those democracies that are not consolidated but survive because of some favorable circumstances. As a result, I can identify the determinants of two related yet distinct processes: the likelihood that a democracy consolidates, and the timing of authoritarian reversals in democracies that are not consolidated. I find that the level of economic development, type of democratic executive, and type of authoritarian past determine whether a democracy consolidates, but have no effect on the timing of reversals in democracies that are not consolidated. That risk is only associated with economic recessions. I also find that existing studies greatly underestimate the risk of early reversals while simultaneously overestimating the risk of late reversals, and that a large number of existing democracies are in fact consolidated.
Mind the gap: CEO–employee pay ratios and shareholder say-on-pay votes

We examine whether the ratio of CEO to employee pay (the pay ratio) informs shareholders' say on pay (SOP) votes for a broad panel of U.S. commercial banks. Voting dissent on SOP proposals is increasing in the level of the pay ratio, particularly for banks in the highest pay ratio decile. Results are robust to a number of sensitivity tests, including controlling for proxy advisor recommendations and information about executive compensation already disclosed in proxy statements. In falsification tests, we show that pay ratios do not inform shareholders' votes on the ratification of the firm's auditor or the election of directors.
Virtual Exit in the Global Information Economy

Because the Internet provides an infrastructure where the marginal costs of distributing digitized information goods is close to zero, it will tend to drive market prices for information goods toward zero. At the same time, by providing “cheap exit” from localized information regulatory regimes, the Internet may promote competition among jurisdictions in producing information regulation. These markets for information products and for information regulation are linked, so that inefficiencies in one will alter the competitive trade - offs in the other. Both forms of competition may be characterized as races to externalize, in which the benefits of competition are potentially dissipated by jurisdictional spillovers. This will necessitate changes in the international regime for copyright and similar information regulation, which will increasingly tend toward a coordinated but potentially inefficient standard.
The Institutional Structure of Immigration Law

Immigration law scholars should give more attention to the institutional structure of immigration law and, in particular, the way that the government addresses problems of asymmetric information in the course of screening potential migrants and attempting to control their behavior once they arrive. Economic models of optimal contracting provide a useful starting point for analyzing this problem. This approach is applied to several current debates in immigration scholarship, including controversies over “crimmigration” and courts’ refusal to extend labor and employment rights to undocumented aliens. In a series of papers, Adam Cox and I argue that immigration scholars should give more attention to the institutional structure of immigration law, using models and principles drawn from economic theory. 2 Most existing scholarship takes different approaches. A large doctrinal literature attempts to work out the legal implications of the immigration code and the cases. 3 Another literature, heavily normative, is oriented to advocacy, and is particularly concerned with racism and other forms of discrimination in immigration law, and the ways in which immigration law falls short of what authors see as constitutional requirements, international obligations, or moral principles. 4 A third literature takes a historical perspective on immigration law, but usually focuses like the second literature on the role of racist and other invidious motives in the evolution of immigration law. 5 As a result of these dominant strands in this literature, the institutional structure of international law and its normative foundations have received less attention than it deserves. By the institutional structure of immigration law, I mean the rules and institutions of immigration 1 This paper was prepared for the University of Chicago Conference on Immigration Law and Institutional Design. Thanks to participants in that conference and Adam Cox for comments, and to Ellie Norton and Randy Zack for helpful research assistance. The Russell Baker Scholars Fund at the University of Chicago Law School provided financial assistance. 2 Adam Cox and Eric Posner, The Second-Order Structure of Immigration Law, 59 Stan L Rev 809 (2007); Adam Cox and Eric Posner, The Rights of Migrants: An Optimal Contract Framework, 84 NYU L Rev 1403 (2009); Adam Cox and Eric Posner, Delegation in Immigration Law, U Chi L Rev (forthcoming 2012), online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1924382 (visited July 23, 2012). 3 See, for example, Stephen H. Legomsky, Fear and Loathing in Congress and the Courts: Immigration and Judicial Review, 78 Tex L Rev 1615 (2000). 4 See, for example, Gerald L. Neuman, Strangers to the Constitution: Immigrants, Borders, and Fundamental Law (Princeton 1996). 5 See, for example, Hiroshi Motomura, Americans in Waiting: The Lost Story of Immigration and Citizenship in the United States (Oxford 2007).
Dangerous times for Medicaid.

These are indeed dangerous times. In the name of “cost-effectiveness,” we cut back health benefits to the poor, who are more likely to be sick than the nonpoor. We miss our chance to heal. In the setting, we’re told, of “scarce resources,” we imperil the health care safety net. In the name of expedience, we miss our chance to be humane and compassionate.’ Medicaid is again - still - the subject of reform discussions in Washington and in state capitals. The program has been subject to varying, sometimes conflicting pressures since its inception. Its primary purpose has been serving the health care needs of the poor and disabled. It was structured, however, to appeal to (or at least to not alienate) private health care providers. In addition, its mix of state and federal funding and control was intended to draw in the states as partners.
How Does Employment Affect Academic Performance Among College Students

The likelihood of working while in school for college students has beenincreasing particularly as the cost of education has also been rising. This paper estimatesthe effect of student work on academic performance. The study uses a statistical procedureto account for the possibility that the number of hours worked is endogenous whenmodeling academic performance. The results indicate that student employment has anegative effect on academic performance for freshmen, but for upper classmen, thenegative effect only occurs after working longer hours. The negative effect is weakest forjuniors, followed by seniors and sophomores (J2; I2).
Predicting the Future of Employment Law: Reflecting or Refracting Market Forces?

In this Article I predict how employment law will change in the future. My task is positive rather than normative. I will not argue that the developments I foresee are good ones to be applauded. Rather, they arise "inevitably" from the way the law will react to changes in labor markets.Of course, as Professor Ronald Dworkin emphasizes, in developing a theory of law one cannot sharply distinguish between the positive and normative. Dworkin points out that even in describing the current legal framework, one must choose what to highlight and what to ignore, a process based on values. When predicting the future, the winnowing process is even more value laden. Karl Marx's predictions about the future of capitalism (which at their core involved changes in employment relationships) had this mixed positive and normative quality. In much of his writing, Marx argued in a positive predictive vein that the rise and fall of capitalism was predestined by historical forces. In other writings, Marx normatively applauded the trends he foresaw and tried to hasten their arrival.To preview my bottom line, I will predict as a positive manner that employment law in the future will pay more attention to efficiency concerns, to the need for firms and economies to be competitive, and to the costs as well as benefits of employment regulation. Those who know my prior work may be skeptical that I disclaim any normative applauding of such trends. At this point, I simply acknowledge the intertwined nature of hope and prediction.
Free at Last? Judicial Discretion and Racial Disparities in Federal Sentencing

AbstractThe federal sentencing guidelines were created to reduce unwarranted sentencing disparities among similar defendants. This paper explores the impact of increased judicial discretion on racial disparities in sentencing after the guidelines were struck down in United States v. Booker (543 U.S. 220 [2005]). Using data on the universe of federal defendants, I find that black defendants received 2 months more in prison compared with their white counterparts after Booker, a 4 percent increase in average sentence length. To identify the sources of racial disparities, I construct a data set linking judges to defendants. Exploiting the random assignment of cases to judges, I find that racial disparities after Booker were greater among judges appointed after Booker, which suggests acculturation to the guidelines by judges with experience sentencing under a mandatory-guidelines regime. Prosecutors also responded to increased judicial discretion after Booker by charging black defendants with binding mandatory...
Seemingly opportunistic management earnings guidance before stock option grants: does it misrepresent firms’ underlying performance?

The exercise price of stock options is typically the closing stock price on the option grant dates, so managers can potentially benefit from low stock prices on those dates. Prior studies find that on average, managers issue more pessimistic guidance before than after grant dates. They interpret this asymmetric pattern as representing managers’ opportunistic behavior. Nevertheless, it is not clear whether this pattern reflects managers’ selective timing of bad news disclosures or a deliberate misrepresentation of underlying firm performance. This paper extends the literature by examining the effects of managerial stock option incentives on the accuracy and the information content of firms’ voluntary earnings guidance. We find that pre-grant guidance significantly improves existing consensus earnings forecasts, and is similar in bias and accuracy to post-grant guidance. Moreover, investors and analysts react similarly to pre-grant vs. post-grant guidance, suggesting that the main consumers of earnings guid...
Large Market Declines and Securities Litigation: Implications for Disclosing Adverse Earnings News

This study finds that large marketwide declines in stock prices are associated with higher litigation incidence and settlements even though marketwide events are legally irrelevant. The probability of litigation nearly doubles (from 0.29% to 0.55%) and the amount of settlements also doubles (from $5.0 million to $10.1 million) when earnings disclosures occur during a large market decline, even after controlling for the firm’s market-adjusted return. Furthermore, judges with (without) specialized experience in securities litigation are more (less) likely to dismiss cases triggered by disclosures during large market declines. This pattern is consistent with experienced judges recognizing and dismissing weaker cases. Finally, managers are less likely to disclose adverse news at the end of trading days with large market declines. Although we cannot definitively identify the motive behind this pattern, it is consistent with managers recognizing increased litigation risk during large market declines. This paper...
Owning, Using and Renting: Some Simple Economics of the "Sharing Economy"

New Internet-based markets enable consumer/owners to rent out their durable goods when not using them. Such markets are modeled to determine ownership, rental rates, quantities, and surplus generated. Both the short run, before consumers can revise their ownership decisions, and the long run, in which they can, are examined to assess how these markets change ownership and consumption. The analysis examines bringing-to-market costs, such as labor costs and transaction costs, and considers the operating platform's pricing problem. A survey of consumers broadly supports the modeling assumptions employed. For example, ownership is determined by individuals' forward-looking assessments of planned usage.
Deterrence and the Adjustment of Sentences During Imprisonment

The prison time actually served by a convicted criminal depends to a significant degree on decisions made by the state during the course of imprisonment—notably, on whether to grant parole. We study a model of the adjustment of sentences assuming that the state’s objective is the optimal deterrence of crime. In the model, the state can lower or raise a criminal’s initial sentence on the basis of deterrence-relevant information obtained during imprisonment. Our focus on sentence adjustment as a means of promoting deterrence stands in contrast to the usual emphasis in sentence adjustment policy on avoiding recidivism.
Does campaign spending help voters learn about ballot measures

What happens when a ballot measure becomes an orphan and there are no campaign expenditures for or against the measure? California's Proposition 91 provides one example of such a scenario and offers a rare opportunity to study what voters learn about a ballot measure in the absence of a campaign. Using an election survey, I assess what voters exiting the polling booth learned about Proposition 91 and compare it to what they learned about several other measures on the same ballot. My results suggest that even without a campaign, a large majority of voters still know a fact about Proposition 91. I also find that campaigns can greatly increase knowledge of the facts they choose to emphasize.
Disclosure Tone and Shareholder Litigation

ABSTRACT: We examine the relation between disclosure tone and shareholder litigation to determine whether managers' use of optimistic language increases litigation risk. Using both general-purpose and context-specific text dictionaries to quantify tone, we find that plaintiffs target more optimistic statements in their lawsuits and that sued firms' earnings announcements are unusually optimistic relative to other firms experiencing similar economic circumstances. These findings are consistent with optimistic language increasing litigation risk. In addition, we find incrementally greater litigation risk when managers are both unusually optimistic and engage in abnormal selling. This finding suggests that firms can mitigate litigation risk by ensuring that optimistic statements are not contradicted by insider selling. Finally, we find that insider selling is associated with litigation risk only when contemporaneous disclosures are unusually optimistic. JEL Classifications: G38; K22; M41; M48. Data Availabil...
RESERVE REQUIREMENTS ON SOVEREIGN DEBT IN THE PRESENCE OF MORAL HAZARD – ON DEBTORS OR CREDITORS?

This paper characterises the effects of reserve requirements on financial loans in the presence of moral hazard on the lender side and sovereign risk on the borrower side. The impacts of such reserve requirements on the equilibrium default risk and borrowing are analysed and their welfare implications discussed. More generous bailouts, financed by the high-income block, encourage borrowing and increase the probability of default. The optimal reserve requirements for both lender and borrower are characterised. The
Defining Armed Conflict

Within hours of the 9/11 attacks in the United States, President George W. Bush declared “a global war on terrorism”. Experts around the world assumed this declaration was a rallying cry, a rhetorical device to galvanize the nation to serious action. By November 2001, however, the evidence began to mount that the President was ordering actions that could only be lawful in a de jure armed conflict: targeting to kill without warning, indefinite detention without trial, and search and seizure on the high seas without consent. It was difficult to criticize these actions on the basis of international law, however, given that international law contained no widely accepted definition of armed conflict. By May 2005, the International Law Association determined that there was a pressing need for a report on the meaning of armed conflict supported by international law. The Use of Force Committee presented its Initial Report on the Meaning of Armed Conflict in International Law at the Rio de Janeiro biennial meeting of the ILA. The Report concludes that all armed conflicts have as minimum two necessary characteristics: 1.) the presence of organized groups 2.) engaged in intense armed fighting. The Report indicates that while the United States has been engaged in an armed conflict in Afghanistan and in Iraq since 9/11, it has not been engaged in a global armed conflict. The Initial Report will be expanded for presentation in final form in 2010 at The Hague biennial meeting.
The New Originalism and the Foreign Affairs Constitution

The influence of originalism in the legal academy is large and growing. And the U.S. Supreme Court has relied heavily on originalism in certain domestic, individual rights cases like District of Columbia v. Heller.1 But foreign affairs is different. In that area, originalism is, as Ingrid Wuerth has observed, “generally speaking, not the way courts or the Executive Branch and Congress actually interpret the Constitution.”2 In fact, there are dozens of important Supreme Court decisions on constitutional foreign affairs issues that pay little or no attention to the original meaning of specific textual provisions of the Constitution.3 The most influential legal framework for modern foreign affairs decisionmaking is Justice Jackson’s concurrence in Youngstown Sheet & Tube Co. v. Sawyer, which begins with an attack on the utility and possibility of
Improving Societal Outcomes in the Organ Donation Value Chain

The mismatch between the demand and supply of organs for transplantation is wide and results in significant socioeconomic costs. We examine a principal-agent problem in the cadaver organ donation value chain (ODVC) where the principal in our case is a social planner that has an overall quality-adjusted-life-year (QALY) improvement objective. The agents include a non-profit organ procurement organization (OPO) with a volume-of-care objective and a profit-maximizing hospital (trauma center). The main contributions of our work are two-fold: First, while the majority of the healthcare operations management literature focuses on the demand side of the ODVC, we develop an analytical model to study the effects of contextual parameters and decisions of the supply-side entities (OPO and hospital) on their respective payoffs and on societal outcomes. This model interrelates key components, including donor heterogeneity, organ recovery reimbursement rates for the hospital, cost of inpatient waiting, shared operating room capacity where organ recovery and other inpatient procedures take place, and QALY increments for organ recipients and the hospital’s other patients. Our analysis highlights the misalignments in the objectives of the social planner, the nonprofit OPO, and the profit-maximizing hospital. Second, we recommend an administratively feasible and Pareto-improving contract that the social planner can use to help the ODVC achieve socially-optimal performance. By showing the existence of a Pareto-improving contractual mechanism in our context, we illustrate the possibility of social value for the non-profit participants to not necessarily be at the expense of economic value for the for-profit participants.
REASON, THE COMMON LAW, AND THE LIVING CONSTITUTION

This article reviews David Strauss's recent book, The Living Constitution. The thesis of Strauss's book is that constitutional law is a kind of common law, based largely on judicial precedent and commonsense judgments about what works and what is fair. In defending this claim, Strauss argues that central constitutional prohibitions of discrimination and protections of free speech have a common-law basis and that the originalist should consequently reject them. The review disputes this contention. It examines Strauss's account of the common law and argues that it cannot support our First Amendment protections of subversive advocacy, as Strauss says it does. The review then offers an alternative account of the common law based on the “classical” common-law theory associated with Coke and Hale. The latter account does support our protections of subversive advocacy but is much less appealing to those distrustful of ambitious and large-scale judicial action.
Investor Sentiment and Option Prices

This paper examines whether investor sentiment about the stock market affects prices of the S&P 500 options. The findings reveal that the index option volatility smile is steeper (flatter) and the risk-neutral skewness of monthly index return is more (less) negative when market sentiment becomes more bearish (bullish). These significant relations are robust and become stronger when there are more impediments to arbitrage in index options. They cannot be explained by rational perfect-market-based option pricing models. Changes in investor sentiment help explain time variation in the slope of index option smile and risk-neutral skewness beyond factors suggested by the current models.
A Reexamination of Corporate Governance and Equity Prices

We reexamine long-term abnormal returns for portfolios sorted on governance characteristics. Firms with strong shareholder rights and firms with weak shareholder rights differ from the population of firms and from each other in how they cluster across industries. Using well-specified tests under this industry clustering, we find statistically zero long-term abnormal returns for portfolios sorted on governance. Our results have important implications for interpreting studies that link governance to firm value and stock returns, demonstrate the importance of the coarseness of industry definitions in financial research, and shed light on addressing statistical problems created by industry clustering in samples. The Author 2009. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org., Oxford University Press.
The Citation of Unpublished Opinions in the Federal Courts of Appeals

The Advisory Committee on Appellate Rules has proposed adding a new Rule 32.1 to the Federal Rules of Appellate Procedure. The proposed rule would authorize litigants in the federal courts of appeals to cite in their briefs and other papers the unpublished opinions of those courts. This seemingly modest proposal - in essence, a proposal that someone appearing before a federal court may remind the court of its own words - is extraordinarily controversial. Over 500 public comments have been submitted by supporters and opponents of Rule 32.1. Comments have been submitted on behalf of most of the federal appellate bench; many other judges (federal and state; appellate and trial; active, senior, and retired); scores of attorneys from all segments of the profession; two dozen law professors; several prominent bar organizations and public-interest groups; and a number of ordinary citizens. Only once in the history of federal rulemaking has a proposed rule attracted more comments. In this article, the author (who serves as Reporter to the Advisory Committee) briefly describes the background events leading to the publication of the proposed rule, summarizes the arguments that commentators have made for and against it, and describes the findings of new studies that explore whether any of these arguments are supported or refuted by empirical evidence. The author concludes by describing the evolution of his thinking about Rule 32.1. The author began as an opponent of the rule, but, for reasons he describes, eventually became convinced that the rule should be approved.
Regional inequality in China

Regional inequality is one of the major subjects of research on China, and is a major concern to the Chinese government. This article reviews the copious research on regional inequality in China. I...