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.
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Through a field experiment set in academia (with a sample of 6,548 professors), we found that decisions about distant-future events were more likely to generate discrimination against women and minorities (relative to Caucasian males) than were decisions about near-future events. In our study, faculty members received e-mails from fictional prospective doctoral students seeking to schedule a meeting either that day or in 1 week; students' names signaled their race (Caucasian, African American, Hispanic, Indian, or Chinese) and gender.
In this report, the authors quantify the strategic relationship between brand management (brand equity) and customer management (the components of CLV), and demonstrate the role that marketing activities play in this relationship. They examine a unique database from the U.S. automobile market, comprised of 10 years of survey-based brand equity measures as well as acquisition rates, retention rates, and customer profitability.
Two experiments examined the psychological and biological antecedents of hierarchical differentiation and the resulting consequences for productivity and conflict within small groups. In Experiment 1, which used a priming manipulation, hierarchically differentiated groups (i.e., groups comprising 1 high-power-primed, 1 low-power-primed, and 1 baseline individual) performed better on a procedurally interdependent task than did groups comprising exclusively either all high-power-primed or all low-power-primed individuals.
Previous research on the antecedents of people’s judgments of procedural and interactional fairness has focused primarily on situational factors. Across three studies we find that dispositional tendencies, in particular people’s general propensity to trust others, also influence fairness perceptions. People who were more trusting had more positive perceptions of procedural and interactional fairness, even when they were exposed to identical fairness information.
Theories based on information costs or frictions have become increasingly popular in macroeconomics and macro-finance. The literature has used various types of information choices, such as rational inattention, inattentiveness, information markets or costly precision.1 Using a unified framework, we compare these different information choice technologies and explain why some generate increasing returns and others, particularly those where agents choose how much public information to observe, generate multiple equilibria.
Web 2.0 provides gathering places for internet users in blogs, forums, and chat rooms. These gathering places leave footprints in the form of colossal amounts of data regarding consumers' thoughts, beliefs, experiences, and even interactions. In this paper, we propose an approach for firms to explore online user-generated content and "listen" to what customers write about their and the competitors' products. Our objective is to convert the user-generated content to market structures and competitive landscape insights.
Despite the continuing, adverse impact of discrimination on the lives of racial and ethnic minorities, the denial of discrimination is commonplace. Four experiments investigated the efficacy of perspective taking as a strategy for combating discrimination denial. Participants who adopted a Black or Latino target's perspective in an initial context were subsequently more likely to explicitly acknowledge the persistence of intergroup discrimination than were non-perspective takers (Experiments 1–3) or participants who adopted a White target's perspective (Experiment 1).
Many mobile applications retrieve content from remote servers via user generated queries. Processing these queries is often needed before the desired content can be identified. Processing the request on the mobile devices can quickly sap the limited battery resources. Conversely, processing user queries at remote servers can have slow response times due communication latency incurred during transmission of the potentially large query. We evaluate a network-assisted mobile computing scenario where mid-network nodes with “leasing” capabilities are deployed by a service provider.
We consider the optimal design of mortgage-backed securities (MBS) in a dynamic setting in which a mortgage underwriter with limited liability can engage in costly hidden effort to screen borrowers and can sell loans to investors. We show that (i) the timing of payments to the underwriter is the key incentive mechanism, (ii) the maturity of the optimal contract can be short, and that (iii) bundling mortgages is efficient as it allows investors to learn about underwriter effort more quickly, an information enhancement effect.
Ichino and Moretti (2009) find that menstruation may contribute to gender gaps in absenteeism and earnings, based on evidence that absences of young female Italian bank employees follow a 28-day cycle. We find this evidence is not robust to the correction of coding errors or small changes in specification, and we find no evidence of increased female absenteeism on 28-day cycles in data on school teachers.
Some conflicts are experienced as depleting and exhausting whereas others are experienced as stimulating and invigorating. We explored the possibility that the focus of perceived threat in conflict determines whether it produces taxing stress or vitalizing arousal. Studies 1 and 2 established that attending to threats to interests, relationships, and identities during interpersonal conflict differentially relates to motivational goals, empathy and perspective-taking, femininity, and a collectivistic self-construal.
Based on a sample of highly leveraged Austrian ski hotels undergoing debt restructurings, we show that reducing a debt overhang leads to a significant improvement in operating performance. Changes in leverage in the debt restructurings are instrumented with Unexpected Snow, which captures the extent to which a ski hotel experienced unusually good or bad snow conditions prior to the debt restructuring.
I investigate the contribution of pharmaceutical innovation to recent longevity growth in Germany and France. First, I examine the effect of the vintage of prescription drugs (and other variables) on the life expectancy and age-adjusted mortality rates of residents of Germany, using longitudinal, annual, state-level data during the period 2001–2007. The estimates imply that about one-third of the 1.4-year increase in German life expectancy during the period 2001–2007 was due to the replacement of older drugs by newer drugs.
Two quantitative meta-analyses examined how the presence of visual channels, vocal channels, and synchronicity influences the quality of outcomes in negotiations and group decision making. A qualitative review of the literature found that the effects of communication channels vary widely and that existing theories do not sufficiently account for these contradictory findings.
We pose a fundamental question in understanding how to identify and design successful communities: What factors predict whether a community will grow and survive in the long term? Social scientists have addressed this question extensively by analyzing offline groups which endeavor to attract new members, such as social movements, finding that new individuals are influenced strongly by their ties to members of the group.
We study economies of asymmetric information with observable types. Trade takes place in lotteries. Individuals face a standard budget constraint, while the incentive compatibility constraints are imposed on the production set of the intermediaries. This formalization encompasses moral hazard and private information economies. Equilibrium allocations are constrained efficient, but, contrary to what stated for example in Jerez (2005), the set of equilibrium allocations may be empty and the Second Welfare Theorem may fail. This happens for two reasons.
We develop a dynamic theory of resource wars and study the conditions under which such wars can be prevented. Our focus is on the interaction between the scarcity of resources and the incentives for war in the presence of limited commitment. We show that a key parameter determining the incentives for war is the elasticity of demand. Our first result identifies a novel externality that can precipitate war: price-taking firms fail to internalize the impact of their extraction on military action.
It is widely accepted that entrepreneurial creation affects destruction, as new and better organizations, technologies and transactions replace old ones. This phenomenon is labeled creative destruction, but it might more accurately be called destructive creation, given the driving role of creation in the process. We reverse the typical causal ordering, and ask whether destruction may drive creation. We argue that economic systems may get stuck in suboptimal equilibria due to path dependence, and that destruction may sweep away this inertia, and open the way for entrepreneurship.
We present a novel linear program for the approximation of the dynamic programming cost-to-go function in high- dimensional stochastic control problems. LP approaches to approximate DP have typically relied on a natural “projection” of a well-studied linear program for exact dynamic programming. Such programs restrict attention to approximations that are lower bounds to the optimal cost-to-go function.
The game of golf involves many different types of shots: long tee shots (typically hit with a driver), approach shots to greens, shots from the sand, putts on the green, and others. While it is easy to determine the winner in a golf tournament by counting strokes, it is not easy to assess which factors most contributed to the victory. In this paper we apply an analysis based on strokes gained (previously termed shot value) to assess the performance of golfers in different parts of the game of golf. Strokes gained is a simple and intuitive measure of the contribution
Do situational cues to individuals' social identities shift the way they look at objects? Do such shifts hinge on the structure of individuals' self-concept? We hypothesized individuals with integrated identities would exhibit attentional biases congruent with identity cues (assimilative response), whereas those with nonintegrated identities would exhibit attentional biases incongruent with identity cues (contrastive response).
We consider a general class of network revenue management problems, where mean demand at each point in time is determined by a vector of prices, and the objective is to dynamically adjust these prices so as to maximize expected revenues over a finite sales horizon. A salient feature of our problem is that the decision maker can only observe realized demand over time, but does not know the underlying demand function which maps prices into instantaneous demand rate.
We consider a general class of network revenue management problems, where mean demand at each point in time is determined by a vector of prices, and the objective is to dynamically adjust these prices so as to maximize expected revenues over a finite sales horizon. A salient feature of our problem is that the decision maker can only observe realized demand over time, but does not know the underlying demand function which maps prices into instantaneous demand rate.
An fMRI study was conducted with unfamiliar and familiar (strong and weak) brands to assess linguistic encoding and retrieval processes, and the use of declarative and experiential information, in brand evaluations. As expected, activations in brain areas associated with linguistic encoding were higher for unfamiliar brands, but activations in brain areas associated with information retrieval were higher for strong brands. Interestingly, weak brands were engaged simultaneously in both processes.
This paper argues that there is a Coasean Bargain available to banks, Long-term Investors, and Bank Regulators around a particular form of "Contingent Capital." By purchasing rights to issue equity in crisis events at a pre-specified price from Long-term Investors, banks can ensure that they will have sufficient regulatory capital available when they need it most: in a crisis. By selling these rights (effectively, a form of crisis insurance) long-term investors can monetize their counter-cyclical investments strategies in banks and, thus, obtain an adequate return as long-term investors.
We propose that managers adept at thinking about their cultural assumptions (cultural metacognition) are more likely than others to develop affect-based trust in their relationships with people from different cultures, enabling creative collaboration. Study 1, a multi-rater assessment of managerial performance, found that managers higher in metacognitive cultural intelligence (CQ) were rated as more effective in intercultural creative collaboration by managers from other cultures.
This paper discusses some existing and potential roles of financial reporting disclosures. The focus is on what are conventionally termed mandatory disclosures, although as Sunder (1997) points out the distinction between mandatory and voluntary is somewhat arbitrary. The paper views disclosure through the lens of incentives. Accounting disclosures are a component of the broad set of information shareholders, debt holders, and other accountees have to assess the stewardship of accountors.
We propose a method for estimating substitute and lost demand when only sales and product availability data are observable, not all products are displayed in all periods (e.g., due to stock-outs or availability controls), and the seller knows its aggregate market share. The model combines a multinomial logit (MNL) choice model with a non-homogeneous Poisson model of arrivals over multiple periods. Our key idea is to view the problem in terms of primary (or first-choice) demand; that is, the demand that would have been observed if all products had been available in all periods.
We propose a method for estimating substitute and lost demand when only sales and product availability data are observable, not all products are displayed in all periods (e.g., due to stock-outs or availability controls), and the seller knows its aggregate market share. The model combines a multinomial logit (MNL) choice model with a non-homogeneous Poisson model of arrivals over multiple periods. Our key idea is to view the problem in terms of primary (or first-choice) demand; that is, the demand that would have been observed if all products had been available in all periods.
A series of laboratory and field experiments test the effect of considering options sequentially (one at a time) versus simultaneously (all at once) on an individual's satisfaction with and commitment to their chosen option. The results converge to reveal a detrimental effect of choosing from sequentially presented options. Unlike simultaneously presented options, the sequential presentation of options evokes hope for a better option to become available in the future and regret from potentially passing one up.
This monograph presents existing and new research on three approaches to multiagent incentives. The goal of all three approaches is to find theories that better explain observed institutions than the standard approach has.
Standard principal-agent models commonly invoked to explain executive pay practices do not account for the involvement of third-party intermediaries in the CEO labor market. This paper investigates the influence of one such intermediary — talent agents who seek out prospective employers and negotiate pay packages on behalf of CEOs. Jensen, Murphy and Wruck (2004) characterize the hiring of such agents as an obvious example of rent extraction by incoming CEOs.
Using accounting data for 7722 non-financial firms in 42 countries, we examine how the 2007–2009 crisis affected firm performance and how various linkages propagated shocks across borders. We isolate and compare effects from changes in business cycle, international trade, and external financing conditions, on firms' profits, sales and investment using both sectoral benchmarks and firm-specific sensitivities estimated prior to the crisis.
The current research investigated how patterns of home and host cultural identification can explain which individuals who have lived abroad achieve the greatest creative and professional success. We hypothesized that individuals who identified with both their home and host cultures (i.e., biculturals) would show enhanced creativity and professional success compared with individuals who identified with only a single culture (i.e., assimilated and separated individuals).
Whether done intentionally or out of habit, many behaviors are repeated. Prior research has demonstrated that past behavior is an excellent predictor of future behavior in contexts as varied as media use, eating and drinking, substance abuse, voting, and travel mode choice, just to name a few. Although no one denies the evidence regarding the prevalence of repeat behavior and the predictive power of past behavior, two issues remain intensely debated
Using informant reports on working professionals, we explored the role of listening in interpersonal influence and how listening may account for at least some of the relationship between personality and influence. The results extended prior work which has suggested that listening is positively related to influence for informational and relational reasons.
Using informant reports on working professionals, we explored the role of listening in interpersonal influence and how listening may account for at least some of the relationship between personality and influence. The results extended prior work which has suggested that listening is positively related to influence for informational and relational reasons.
Increasingly, individuals identify with two or more cultures. Prior research has found the degree to which individuals chronically integrate these identities (bicultural identity integration; BII) moderates responses to cultural cues: High BII individuals assimilate (adopting biases that are congruent with norms of the cued culture), whereas low BII individuals contrast (adopting biases that are incongruent with these norms). The authors propose BII can also be a psychological state and modulated by shifts in processing styles.
We develop and test an incentive-compatible Conjoint Poker (CP) game. The preference data collected in the context of this game are comparable to incentive-compatible choice-based conjoint (CBC) analysis data. We develop a statistical efficiency measure and an algorithm to construct efficient CP designs. We compare incentive-compatible CP to incentive-compatible CBC in a series of three experiments (one online study and two eye-tracking studies). Our results suggest that CP induces respondents to consider more of the profile-related information presented to them compared with CBC.
In social dilemmas, negotiations, and other forms of strategic interaction, mind-reading — intuiting another party's preferences and intentions — has an important impact on an actor's own behavior. In this paper, we present a model of how perceivers shift between social projection (using one's own mental states to intuit a counterpart's mental states) and stereotyping (using general assumptions about a group to intuit a counterpart's mental states).
Travis Proulx and Michael Inzlicht offer an intriguing and ambitious model that seeks to parsimoniously capture the full range of meaning threats and the many psychological mechanisms that people use to cope with those threats. In this commentary, we articulate both our agreements and our disagreements with their meaning maintenance model (MMM). In general, we find the model both compelling and intriguing, and we find promise in several of its core assertions. However, we believe the current model, like any incipient model, has yet to incorporate some critical core constructs.
What is business anthropology and what should it be in the future? My reflections are based upon my reading of others’ work and my own experience as an observant participant in marketing research and advertising. My current practice is that of a Principal at a marketing research firm, with which I have been affiliated since 2006. For 25 years prior, I was an advertising executive, working in the areas of account management and account planning.
Four experiments examined the effects of perspective taking on processes contributing to stereotype maintenance: biases in social memory, behavior explanations, and information seeking. The first two experiments explored whether perspective taking influences memory and spontaneous explanations for stereotype-relevant behaviors. Relative to participants in an objective-focus condition, perspective takers exhibited better recall of stereotype-inconsistent behaviors (Experiment 1) and spontaneously generated more dispositional explanations for them (Experiment 2).
The current paper reviews the concept of power and offers a new architecture for understanding how power guides and shapes consumer behavior. Specifically, we propose that having and lacking power respectively foster agentic and communal orientations that have a transformative impact on perception, cognition, and behavior. These orientations shape both who and what consumers value. New empirical evidence is presented that synthesizes these findings into a parsimonious account of how power alters consumer behavior as a function of both product attributes and recipients.
Five experiments demonstrate that experiencing power leads to overconfident decision-making. Using multiple instantiations of power, including an episodic recall task (Experiments 1–3), a measure of work-related power (Experiment 4), and assignment to high- and low-power roles (Experiment 5), power produced overconfident decisions that generated monetary losses for the powerful. The current findings, through both mediation and moderation, also highlight the central role that the sense of power plays in producing these decision-making tendencies.