Breaking the Cycle: How the News and Markets Created a Negative Feedback Loop in COVID-19
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
Adapted from “Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments,” by Laura Boudreau of Columbia Business School, Julia Cajal Grossi of the Geneva Graduate Institute, and Rocco Macchiavello of the London School of Economics.
Adapted from “Online Advertising as Passive Search,” by Raluca M. Ursu of New York University Stern School of Business, Andrey Simonov of Columbia Business School, and Eunkyung An of New York University Stern School of Business.
This paper from Columbia Business School, “Meaning of Manual Labor Impedes Consumer Adoption of Autonomous Products,” explores marketing solutions to some consumers’ resistance towards autonomous products. The study was co-authored by Emanuel de Bellis of the University of St. Gallen, Gita Johar of Columbia Business School, and Nicola Poletti of Cada.
Co-authored by John B. Donaldson of Columbia Business School, “The Macroeconomics of Stakeholder Equilibria,” proposes a model for a purely private, mutually beneficial financial agreement between worker and firm that keeps decision-making in the hands of stockholders while improving the employment contract for employees.
At Columbia Business School, our faculty members are at the forefront of research in their respective fields, offering innovative ideas that directly impact the practice of business today. A quick glance at our publication on faculty research, CBS Insights, will give you a sense of the breadth and immediacy of the insight our professors provide.
As a student at the School, this will greatly enrich your education. In Columbia classrooms, you are at the cutting-edge of industry, studying the practices that others will later adopt and teach. As any business leader will tell you, in a competitive environment, being first puts you at a distinct advantage over your peers. Learn economic development from Ray Fisman, the Lambert Family Professor of Social Enterprise and a rising star in the field, or real estate from Chris Mayer, the Paul Milstein Professor of Real Estate, a renowned expert and frequent commentator on complex housing issues. This way, when you complete your degree, you'll be set up to succeed.
Columbia Business School in conjunction with the Office of the Dean provides its faculty, PhD students, and other research staff with resources and cutting edge tools and technology to help push the boundaries of business research.
Specifically, our goal is to seamlessly help faculty set up and execute their research programs. This includes, but is not limited to:
All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.
The paper develops a simple model of corporate ownership structure in which costs and benefits of ownership concentration are analyzed. The model compares the liquidity benefits obtained through dispersed corporate ownership with the benefits from efficient management control achieved by sonic degree of ownership concentration. The paper reexamines the free-rider problem in corporate control in the presence of liquidity trading, derives predictions for the trade and pricing of blocks, and provides criteria for the optimal choice of ownership structure.
In this article, we argue that the time has come to begin to integrate the Coasian view of the firm--which is concerned with the interactions between ownermanagers--and the Bede and Means perspective--which emphasizes the separation of ownership and control in most corporations.
A commentary on Barbara E. Kahn's article, Dynamic Relationships with Customers: High-Variety Strategies, published in the winter 1998 issue of Journal of the Academy of Marketing Sciences is provided. The purpose is to question Kahn's assumptions and hence to suggest some implications for research.
In this paper we address periodic base-stock policies for stochastic economic lot scheduling problems. These represent manufacturing settings in which multiple items compete for the availability of a common capacity source, in the presence of setup times and/or costs, incurred when switching between items, and in the presence of uncertainty regarding demand patterns, production, and setup times. Under periodic base-stock policies, items are produced according to a given periodic item-sequence.
This paper studies the trade-off between inventory levels and the delivery leadtime offered to customers in achieving a target level of service. It addresses the question of how much a delivery leadtime can be reduced, per unit increase of inventory, at a fixed fill rate. We show that for a class of assemble-to-order models with stochastic demands and production intervals there is a simple linear trade-off between inventory and delivery leadtime, in a limiting sense, at high fill rates.
We consider a distribution system consisting of a single warehouse and many geographically dispersed retailers. Each retailer faces demands for a single item which arise a deterministic, retailer specific rate. The retailers' stock is replenished by a fleet of vehicles of limited capacity, departing and returning to the warehouse and combining deliveries into efficient routes. The cost of any given route consists of a fixed component and a component which is proportional with the total distance driven. Inventory costs are proportional with the stock levels.
Marketers are making increasing use of very brief messages that mention just a brand name or a brand name with a short headline, as in event sponsorship and program endorsements. There has been debate over the effectiveness of these "advertising fragments." This paper introduces an approach for controlled testing of the effects of advertising fragments. Using a reaction-time based procedure, we show that a key effect of advertising fragments is to revive established brand associations, even though these associations are not explicitly communicated.
Effective communication requires that consumers attribute the message content to its intended source. The proposed framework distinguishes four types of source identification processes-cued retrieval, memory-trace refreshment, schematic inferencing, and pure guessing-and delineates their contingencies. Two experiments examine portions of the framework, and experiment 2 introduces a new methodology for decomposing multiple processes. Findings suggest that when cued retrieval fails, consumers try to refresh the original memory trace for the learning episode-a process that is effortful.
Effective communication requires that consumers attribute the message content to its intended source. The proposed framework distinguishes four types of source identification processes-cued retrieval, memory-trace refreshment, schematic inferencing, and pure guessing-and delineates their contingencies. Two experiments examine portions of the framework, and experiment 2 introduces a new methodology for decomposing multiple processes. Findings suggest that when cued retrieval fails, consumers try to refresh the original memory trace for the learning episode-a process that is effortful.
US cities capture public benefits from private developers under several bargaining frameworks: exactions, incentive zoning and public-private developments. These frameworks exist along a continuum of policy-intervention strategies, from passive regulation to active development, from a quid pro quo to incentive to investment policy posture. Each strategy defines a public position, structure and process for negotiation and parameters for the bargaining process.
This paper develops a model of the breakup or unification of nations. In each nation the decision to separate is taken by majority voting. A basic trade-off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted. The model emphasizes political conflicts over redistribution policies.
A study examines the long-term effects of promotion and advertising on consumers' brand choice behavior. Some 8 1/4 years of panel data for frequently purchased packaged goods are used to address 2 questions: 1. Do consumers' responses to marketing mix variables, such as price, change over a long period of time? 2. If yes, are these changes associated with changes in manufacturers' advertising and retailers' promotional policies? Using these results, implications for manufactures' pricing, advertising and promotion policies are drawn.
This paper presents an applied methodology to assist managers in strategically setting prices and allocating resources over the product, brand, or adoption (diffusion) life cycle. While substantial theoretical work has been achieved in this area in the management science and operations research disciplines, approaches which can be implemented as managerial tools are generally lacking.
We consider the problem of scheduling N jobs on M parallel machines so as to minimize the maximum earliness or tardiness cost incurred for each of the jobs. Earliness and tardiness costs are given by general (but job-independent) functions of the amount of time a job is completed prior to or after a common due date. We show that in problems with a nonrestrictive due date, the problem decomposes into two parts. Each of the M longest jobs is assigned to a different machine, and all other jobs are assigned to the machines so as to minimize their makespan.
Selling information that is later used in decision making constitutes an increasingly important business in modem economies (Jensen 1991). Information is sold under a large variety of forms: industry reports, consulting services, database access, and/or professional opinions given by medical, engineering, accounting/ financial, and legal professionals, among others.
We propose and analyze a heuristic that uses region partitioning and an aggregation scheme for customer attributes (load size, time windows, etc.) to create a finite number of customer types. A math program is solved based on these aggregated customer types to generate a feasible solution to the original problem. The problem class we address is quite general and defined by a number of general consistency properties.
We propose and analyze a heuristic that uses region partitioning and an aggregation scheme for customer attributes (load size, time windows, etc.) to create a finite number of customer types. A math program is solved based on these aggregated customer types to generate a feasible solution to the original problem. The problem class we address is quite general and defined by a number of general consistency properties.
We give a unified probabilistic analysis for a general class of bin packing problems by directly analyzing corresponding mathematical programs. In this general class of packing problems, objects are described by a given number of attribute values. (Some attributes may be discrete; others may be continuous.) Bins are sets of objects, and the collection of feasible bins is merely required to satisfy some general consistency properties.
We give a unified probabilistic analysis for a general class of bin packing problems by directly analyzing corresponding mathematical programs. In this general class of packing problems, objects are described by a given number of attribute values. (Some attributes may be discrete; others may be continuous.) Bins are sets of objects, and the collection of feasible bins is merely required to satisfy some general consistency properties.
In this paper we consider single machine scheduling problems with a common due-date for all jobs, arbitrary monotone earliness and tardiness costs and arbitrary breakdown and repair processes. We show that the problem is equivalent to a deterministic one without breakdowns and repairs and with an equivalent cost function of a job's completion time. A V-shaped schedule without idle times is shown to be optimal, if this equivalent cost function is quasi-convex.
We consider a single-item, periodic-review inventory model with uncertain demands in which each period's production volume is limited by a capacity level. The demand distributions, capacity levels, and cost parameters vary according to a periodic pattern. We prove that modified base-stock policies are optimal for the finite-horizon planning model and for both the infinite-horizon discounted and undiscounted cost criterion. We further show that the optimal base-stock levels can be calculated via a simple but efficient value-iteration method.
We provide a framework in which we link the valuation and asset allocation policies of defined benefits plans with the lifetime marginal productivity schedule of the worker and the pension plan formula. In turn, we examine the retirement policies that are implied by the primitives of the model and the value of pension obligations. Our model provides an explicit valuation formula for a stylized defined benefits plan. The optimal asset allocation policies consist of the replicating portfolio of the pension liabilities and the growth optimum portfolio independent of the pension liabilities.
We consider multimachine scheduling problems with earliness and tardiness costs. We first analyze problems in which the cost of a job is given by a general nondecreasing, convex function F, of the absolute deviation of its completion time from a (common) unrestrictive due-date, and the objective is to minimize the sum of the costs incurred for all N jobs. (A special case to which considerable attention is given to the completion time variance problem.)
This paper presents a stochastic multidimensional unfolding (MDU) procedure to spatially represent individual differences in phased or sequential decision processes. The specific application or scenario to be discussed involves the area of consumer psychology where consumers form judgments sequentially in their awareness, consideration, and choice set compositions in a phased or sequential manner as more information about the alternative brands in a designated product/service class are collected.
We use when-issued transactions data to assess the Treasury's current experiment with uniform auctions. When-issued volume is higher under uniform as compared to discriminatory auctions, suggesting a higher information release, which should reduce pre-auction uncertainty and the winner's curse. Under uniform auctions, when-issued volatility falls after the auction and again after the outcome announcement. The pattern is the opposite for discriminatory auctions. This is further evidence that uniform auctions increase pre-auction information and lower the short squeeze.
When the surge of equity REIT initial public offerings (IPOs) came to market in 1993 and 1994, the quality as well as an obvious increase in the quantity of newly securitized real estate (approximately $15.1 billion in the first two years of this bull market), defined a new REIT marketplace. By the end of 1995, the implied market capitalization of equity REITs had reached $59 billion, fourfold its size in 1992, and these real estate companies controlled approximately $83 billion in real estate.
In this paper we discuss stochastic Economic Lot Scheduling Problems (ELSP), i.e., settings where several items need to be produced in a common facility with limited capacity, under significant uncertainty regarding demands, production times, setup times, or combinations thereof. We propose a class of production/inventory strategies for stochastic ELSPs and describe how a strategy which minimizes holding, backlogging, and setup costs within this class can be effectively determined and evaluated.
A popular prediction in persuasion research is that decreased ability to process information increases reliance on peripheral cues and decreases reliance on central claims. This paper explains why this prediction does not necessarily hold when processing capacity is impaired by high arousal. Three experiments suggest that two types of processes underlie arousal effects on persuasion. Arousal induces selective processing of cues that are diagnostic at the expense of cues that are nondiagnostic - the selection effect.
The optimal number of items to be included in a service bundle for a profit-maximizing firm that uses pure components, pure bundling, or mixed bundling strategies is determined. When applied to Venkatesh and Mahajan's (1993) data, the number of events held is shown to have a substantial impact on firm profits. The pricing strategies of a nonprofit organization that seeks to maximize usage subject to a nondeficit constraint is also studied. Using the same data, it is shown that, compared to a profit maximizing firm, a usage-maximizing nonprofit organization 1. charges lower prices, 2.
This study investigates the manner in which consumers make investment decisions for mutual funds. Investors report that they consider many nonperformance-related variables. When investors are grouped by similarity of investment decision process, a single small group appears to be highly knowledgeable about its investments. However, most investors appear to be naive, having little knowledge of the investment strategies or financial details of their investments. Implications for mutual fund companies are discussed.
We derive efficient and highly accurate approximations for the customer waiting-time distributions experienced in stochastic economic lot scheduling systems (SELSPs) that are governed by general base-stock policies under a cyclic or more general periodic item sequence. SELSPs involve settings where several items need to be produced in a common facility with limited capacity, under significant uncertainty regarding demands, unit production times, setup times, or combinations thereof.
This articles studies the design and valuation of debt contracts in a general dynamic setting under uncertainty. We incorporate some insights of the recent corporate finance literature into a valuation framework. The basic framework is an extensive form game determined by the terms of a debt contract and applicable bankruptcy laws. Debtholders and equityholders behave noncooperatively. The firm's reorganization boundary is determined endogenously. Strategic debt service results in significantly higher default premia at even small liquidation costs.
Many sequential planning problems can be represented as a shortest path problem in an acyclic network. This includes all deterministic dynamic programs as well as certain stochastic sequential decision problems. In this article, we identify a large class of shortest path problems for which a general efficient algorithm for the simultaneous solution and detection of minimal forecast horizons is developed.
This paper offers an exact definition of the value created by firms together with their suppliers and buyers. The "added value" of a firm is similarly defined, and shown under certain conditions to impose an upper bound on how much value the firm can capture. The key to a firm's achieving a positive added value is the existence of asymmetries between the firm and other firms. The paper identifies four routes ("value-based" strategies) that lead to tthe creation of such asymmetries. Our analysis reveals the equal importance of a firm's supplier and buyer relations.
We examine conditions under which "Veblen effects" arise from the desire to achieve social status by signaling wealth through conspicuous consumption. While Veblen effects cannot ordinarily arise when preferences satisfy a "single-crossing property," they may emerge when this property fails. In that case, "budget" brands are priced at marginal cost, while "luxury" brands, though not intrinsically superior, are sold at higher prices to consumers seeking to advertise wealth.
Theoretical work on financing costs under asymmetric information has linked shifts in firms' internal funds and investment spending, holding constant investment opportunities. An impediment to convincing tests of these models is the lack of firm-level data on the relative cost of internal and external funds. We use a tax experiment, the surtax on undistributed profits in the 1930s, to identify firms' relative cost of internal and external funds by calculating surtax margins.
Theoretical work on financing costs under asymmetric information has linked shifts in firms' internal funds and investment spending, holding constant investment opportunities. An impediment to convincing tests of these models is the lack of firm-level data on the relative cost of internal and external funds. We use a tax experiment, the surtax on undistributed profits in the 1930s, to identify firms' relative cost of internal and external funds by calculating surtax margins.
The article presents a study using the Euler equation for capital accumulation by individual business firms. First, authors' use an estimation strategy based on the Euler equation representation of firms' investment decisions. This strategy reflects reservations with standard investment models based on the q theory with adjustment costs. In particular, there are well-known problems in measuring marginal q, as well as concerns that observed stock market valuations may not accord with the predictions of the efficient markets hypothesis.
In most dynamic planning problems, one observes that an optimal decision at any given stage depends on limited information, i.e. information pertaining to a limited set of adjacent or nearby stages. This holds in particular for planning problems over time, where an optimal decision in a given period depends on information related to a limited future time horizon, a so-called forecast horizon, only. In this paper we identify a general class of dynamic programs in which an efficient forward algorithm can be designed to solve the problem and to identify minimal forecast horizons.
This paper seeks to establish a parametric linkage between fuzzy set theoretic techniques and commonly used preference formation rules in psychology and marketing. Such a linkage helps to benefit both fields. We accomplish this objective by using a linear model with interaction term which nests many common preference protocols; conjunction (fuzzy and), disjunction (fuzzy or), counterbalance (fuzzy xor) and linear compensatory.
We model the effects of variety-seeking and marketing-mix variables on consumers' purchases of coffee using a nested logit model. We premise that on any given purchase occasion, the utilities of brands other than the one purchased on the previous occasion may be correlated due to the consumer's tendency to seek variety or to avoid variety. This results in a two-level hierarchical model where choice on any purchase occasion is conditioned on the brand purchased on the immediately preceding occasion.
We consider a production/distribution system represented by a general directed acyclic network. Each node is associated with a specific "product" at a given location and/or production stage. An arc (i, j) indicates that item i is used to "produce" item j. External demands may occur at any of the network's nodes. These demands occur continuously at item-specific constant rates. Components may be assembled in any given proportions. The cost structure consists of inventory carrying, viable, and fixed production/distribution costs.
This paper addresses a class of single-machine scheduling problems with a common due-date for all jobs, and general earliness and tardiness costs. We show that a class of simple, polynomial, "greedy-type" heuristics can be used to generate close-to-optimal schedules. An extensive numerical study exhibits small optimality gaps. For convex cost structures, we establish that the worst-case optimality gap is bounded by e−i ≈ 0.36, if the due-date is non-restrictive.
Faced with turbulent national and international environments, entire U.S. industries-most notably steel and automobiles-have revealed a distinct propensity to overlook radically new types of competitors, cling to traditional technologies, and remain mired in similar, yet outdated, strategic postures. In this article, we ascribe the adaptive failures of entire industries not only to the micro-cultures of single organizations, but also to what we term inter-organizational "macro-cultures"-relatively idiosyncratic beliefs that are shared by managers across organizations.
This goal of this paper is to establish a research agenda that will lead to a stream of research that closes the gap between actual and normative strategic managerial decision making. We start by distinguishing strategic managerial decision making (choices) from other choices. Next, we propose a conceptual model of how managers make strategic decisions that is consistent with the observed gap between actual and normative decision making.
Polling system models are extensively used to model a large variety of computer and communication networks as well as production and service systems in which multiple customer classes or a number of distinct items compete for the capacity of a common server or production facility. In this paper we describe an efficient approximation method for the steady state distributions of the queue sizes and waiting times. This method is highly accurate as demonstrated by an extensive numerical study.
The widespread belief in the intuitive relationship between quality, customer satisfaction and economic returns, as well as the growing frustration with attempts to improve quality, serve to underscore the importance of analytical and empirical work increasing understanding of customer satisfaction and how it relates to economic returns. Firms that actually achieve high customer satisfaction also enjoy superior economic returns.
In this study we investigate several hypotheses relating strategic forecasting to market segment selection and firm performance. In the context of a strategic marketing simulation, subjects in 14 competitive industries made strategic forecasts for market segment size and benchmark prices.