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.
It has been recently proposed that people can flexibly rely on sources of control that are both internal and external to the self to satisfy the need to believe that their world is under control (i.e., that events do not unfold randomly or haphazardly). Consistent with this, past research demonstrates that, when personal control is threatened, people defend external systems of control, such as God and government.
Four experiments explored whether 2 uniquely human characteristics — counterfactual thinking (imagining alternatives to the past) and the fundamental drive to create meaning in life — are causally related. Rather than implying a random quality to life, the authors hypothesized and found that counterfactual thinking heightens the meaningfulness of key life experiences. Reflecting on alternative pathways to pivotal turning points even produced greater meaning than directly reflecting on the meaning of the event itself.
The conventional wisdom is that politicians' rent-seeking motives increase public debt and deficits. This is because myopic politicians face political risk and prefer to extract political rents as early as possible. In this paper we study the determination of government debt and deficits in a dynamic political economy model. We show that this conventional wisdom relies on economic volatility being low relative to political uncertainty.
Identifying the right business model for addressing global customers and formalizing that model into a global customer management program is a key task for any firm with global aspirations. The key success factor is embedding the program firmly within the firm's corporate strategy. Simply leveraging domestic or regional account management into such a program will not deliver the desired results. Based on extensive research with a global company database, this article presents a framework for successfully introducing a global customer management program.
Marketing research and advertising strategic planning offer viable and financially attractive career options for anthropologists because many businesses seek deep understandings of consumer lifestyles and brand use. As professionally trained anthropologists operating in the corporate world, we see a bright future for anthropologists, but we believe that there are merits in broadening the typical anthropological approach to incorporate additional theory and methods from other social and behavioral sciences, particularly psychology.
When bad things happen, companies need the right strategy for talking their way out of a mess and avoiding a calamitous pummeling of their corporate image. Choosing the best response can spell the difference between a brand's survival — even enhancement — and its irreversible tarnishing.
New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from India to investigate the relationship between declines in trade costs, imports of intermediate inputs and domestic firm product scope. We estimate substantial gains from trade through access to new imported inputs. Moreover, we find that lower input tariffs account on average for 31 percent of the new products introduced by domestic firms.
The so-called Fed model postulates that the dividend or earnings yield on stocks equals the yield on nominal Treasury bonds, or at least that they should be highly correlated. Indeed, there is a strikingly high time series correlation between the yield on nominal bonds and the dividend yield on equities. This positive correlation can be traced to the fact that both bond and equity yields comove strongly and positively with expected inflation.
It is now widely accepted that the institutional interventions of states are a foundational influence on the dynamics of organizational forms. But why do states act? In this paper, we apply the behavioral theory of the firm to develop an explanation of state actions based on the fact that they are boundedly rational rivals. The instrument of state competition we examine is the founding of business incubators, a primary tool in the entrepreneurial strategy of economic development.
Although established money managers operate in an environment which seems competitive, they also seem to be very profitable. The present value of the expected future profits from managing a collection of funds is equal to the value of the assets under management multiplied by the profit margin, assuming that the managed funds will remain in business forever, and that there will be zero asset flow into and out of the funds, zero excess returns net of trading costs, a fixed management fee proportional to the assets under management and a fixed profit margin for the management company.
In six experiments, we investigated the role of resource valence in intergenerational attitudes and allocations. We found that, compared to benefits, allocating burdens intergenerationally increased concern with one's legacy, heightened ethical concerns, intensified moral emotions (e.g., guilt, shame), and led to feelings of greater responsibility for and affinity with future generations. We argue that, because of greater concern with legacies and the associated moral implications of one's decisions, allocating burdens leads to greater intergenerational generosity as compared to benefits.
I examine the impact of a property tax relief program in New York State that lowered the marginal cost of school expenditure to homeowners. I find that a typical school district, which received 20% of its revenue through the program in the school year 2001–2002, raised expenditure by 4.1% and local property taxes by 6.8% in response to the program. I then examine how the preferences of various groups of local taxpayers affect educational spending by identifying systematic variation across districts in the response to fiscal incentives.
The new challenges that the 21st century brings to the field of marketing competition inspired the International Journal of Research in Marketing (IJRM) to sponsor a special section on the topic. This special section was preceded by a conference at the University of Mainz, co-sponsored by IJRM, MSI, SMU (Singapore) and the University of Mainz.
Five marked evolutions around the turn of the century present new challenges in marketing competition, which may lead to particularly fruitful streams of research.
The present study examined how biculturals (Asian-Americans) adjust to differing cultural settings in performance appraisal. Biculturals vary in the degree to which their two cultural identities are compatible or oppositional — Bicultural Identity Integration (BII). The authors found that individual differences in BII interacted with the manipulation of the cultural setting (American or Asian) in determining whether employee outcomes were evaluated as matching or mismatching cultural norms.
Recent theoretical work predicts that an important margin of adjustment to deregulation or trade reforms is the reallocation of output within firms through changes in their product mix. Empirical work has accordingly shifted its focus towards multi-product firms and their product mix decisions. Existing studies have however focused exclusively on the U.S.
Particle learning (PL) provides state filtering, sequential parameter learning and smoothing in a general class of state space models. Our approach extends existing particle methods by incorporating the estimation of static parameters via a fully-adapted filter that utilizes conditional sufficient statistics for parameters and/or states as particles. State smoothing in the presence of parameter uncertainty is also solved as a by-product of PL. In a number of examples, we show that PL outperforms existing particle filtering alternatives and proves to be a competitor to MCMC.
In contrast to the view that social perception has symmetric effects on judgments and behavior, the current research explored whether perspective-taking leads stereotypes to differentially affect judgments and behavior. Across three studies, perspective-takers consistently used stereotypes more in their own behavior while simultaneously using them less in their judgments of others. After writing about an African-American, perspective-taking tendencies were positively correlated with aggressive behavior but negatively correlated with judging others as aggressive.
Price discrimination is an extremely common type of pricing strategy engaged in by virtually every business with some discretionary pricing power. The issue of whether price discrimination reduces or increases social welfare has been considered by economists since at least 1920. At that time, it was demonstrated that, under certain (restrictive) conditions, price discrimination will reduce social welfare.
Five studies explored whether power increases moral hypocrisy, a situation characterized by imposing strict moral standards on others but practicing less strict moral behavior oneself. In Experiment 1, compared to the powerless, the powerful condemned other people's cheating, while cheating more themselves. In Experiments 2–4, the powerful were more strict in judging others' moral transgressions but more lenient in judging their own transgressions.
Economics is the study of how scarce resources are allocated. Operations research studies how to accomplish goals in the least costly manner. These fields have much to offer each other in terms of challenging problems that need to be solved and the techniques to solve them. This was the case after World War II, partly because the individuals who went on to be the leading scholars in economics and operations research worked together during WWII. In fact, the two fields share many early luminaries, including Arrow, Dantzig, Holt, Kantorovich, Koopmans, Modigliani, Scarf, and von Neumann.
The preferred risk habitat hypothesis, introduced here, is that individual investors select stocks whose volatilities are commensurate with their risk aversion. The data, 1995-2000 holdings of over 20,000 clients at a large German broker, are consistent with the predictions of the hypothesis: the portfolios contain highly similar stocks in terms of volatility, when stocks are sold they are replaced by stocks of similar volatilities, and the more risk averse customers indeed hold and trade into less volatile stocks.
During a conversation, it is common for a speaker to describe a third-party that the listener does not know. These professed impressions not only shape the listener's view of the third-party but also affect judgments of the speaker herself. We propose a previously unstudied consequence of professed impressions: judgments of the speaker's power. In two studies, we find that listeners ascribe more power to speakers who profess impressions focusing on a third-party's conscientiousness, compared to those focusing on agreeableness.
As we contemplate the raft of regulatory reforms currently being proposed, it is important not only to consider the content of regulation, but also its structure. In particular, it is important to ask how the role of the Fed as a regulator should change, and how the targets and the tools of monetary and regulatory policy should adapt to new regulatory mandates. For example, some reform proposals envision a dramatic expansion of Fed regulatory authority, while others do not, and some proposals envision the Fed's using monetary policy to prick asset bubbles, while others do not.
We prove generic existence of recursive equilibrium for overlapping generations economies with uncertainty. "Generic" here means in a residual set of utilities and endowments. The result holds provided there is sufficient intragenerational household heterogeneity.
Telecommunications infrastructure goes through technology-induced phases, and the regulatory regime follows. Telecom 1.0, based on copper wires, was monopolistic in market structure and led to a Regulation 1.0 with government ownership or control. Wireless long-distance and then mobile technologies enabled the opening of that system to one of multi-carrier provision, with Regulation 2.0 stressing privatization, entry, liberalization, and competition. But now, fiber and high-capacity wireless are raising scale economies and network effects, leading to a more concentrated market.
Companies in a variety of industries (e.g., airlines, hotels, theaters) often use last-minute sales to dispose of unsold capacity. Although this may generate incremental revenues in the short term, the long-term consequences of such a strategy are not immediately obvious: More discounted last-minute tickets may lead to more consumers anticipating the discount and delaying the purchase rather than buying at the regular (higher) prices, hence potentially reducing revenues for the company.
Teaching may be the most-scrutinized occupation in the economy. Over the past four decades, empirical researchers—many of them economists—have accumulated an impressive amount of evidence on teachers: the heterogeneity in teacher productivity, the rise in productivity associated with teaching credentials and on-the-job experience, rates of turnover, the costs of recruitment, the relationship between supply and quality, the effect of class size and the monetary value of academic achievement gains over a student's lifetime.
In November of 2007, the New York City Department of Education assigned each elementary and middle school a letter grade (A to F) as part of a new accountability system. Grades were based on continuous numeric scores derived from levels and changes in student achievement and other school environmental factors such as attendance, and were linked to a system of rewards and consequences for schools and principals. We use the discontinuities in the assignment of grades to estimate the impact of accountability in the short run.
Active investors provide entrepreneurs with risk-sharing and value-adding effort, e.g., in form of advising, networking and monitoring. However, holdup problems may create a conflict between two key objectives for high-quality entrepreneurs: to elicit investor effort and to credibly signal their firm type by retaining shares. As a result, pooling of startup firms of different types may arise, in particular when investor effort is essential. More established firms, with access to multiple signals, can always realize both of these objectives.
In this paper, we measure the extent to which subjective and objective evaluations of new teachers in New York City can predict their future impacts on student achievement. Specifically, we examine evaluations of applicants to an alternative certification program, evaluations of new teachers by mentors that work with them during their first year, and evaluations based on student achievement data from their first year of teaching. We use a large sample, relative to prior work, and, unlike other studies (with the exception of John H. Tyler et al.
The fields of statistics and econometrics have developed powerful methods for testing the validity (specification) of a model based on its fit to underlying data. Unlike statisticians, managers are typically more interested in the performance of a decision rather than the statistical validity of the underlying model. We propose a framework and a statistical test that incorporates decision performance into a measure of statistical validity. Under general conditions on the objective function, asymptotic behavior of our test admits a sharp and simple characterization.
The fields of statistics and econometrics have developed powerful methods for testing the validity (specification) of a model based on its fit to underlying data. Unlike statisticians, managers are typically more interested in the performance of a decision rather than the statistical validity of the underlying model. We propose a framework and a statistical test that incorporates decision performance into a measure of statistical validity. Under general conditions on the objective function, asymptotic behavior of our test admits a sharp and simple characterization.
The present research explores how people's place in a power hierarchy alters their representations of valued objects. The authors hypothesized that powerlessness produces an accentuation bias by altering the physical representation of monetary objects in a manner consistent with the size-to-value relationship. In the first three experiments, powerless participants, induced through episodic priming or role manipulations, systematically overestimated the size of objects associated with monetary value (i.e., quarters, poker chips) compared to powerful and baseline participants.
We study the economic sources of stock-bond return comovements and their time variation using a dynamic factor model. We identify the economic factors employing a semistructural regime-switching model for state variables such as interest rates, inflation, the output gap, and cash flow growth. We also view risk aversion, uncertainty about inflation and output, and liquidity proxies as additional potential factors.
Using micro data on virtually all of the drugs and diseases of over 500,000 people enrolled in Puerto Rico's Medicaid program, the impact of the vintage (original FDA approval year) of drugs used to treat a patient on the patient's three-year probability of survival, controlling for demographic characteristics (age, sex, and region), utilization of medical services, and the nature and complexity of illness are examined. It is found that people using newer drugs during January-June, 2000, were less likely to die by the end of 2002, conditional on the covariates.
We examine the influence of an interstate network created by intergovernmental organizations (IGOs) on the global diffusion of democracy. We propose that IGOs facilitate democracy's diffusion by transmitting information between member states and by interpreting that information according to prevailing norms in the world society, where democracy is viewed as the legitimate form of government. We employ a network autocorrelation model to track changes in democracy among all of the world's countries from 1815 to 2000.
Hospital ambulance diversions are prevalent and increasing nationwide as emergency departments experience growing congestion. Using negative binomial regressions, this paper links the number of acute myocardial infarction (AMI) deaths to the level and extent of diversion in the five boroughs of New York City. The results indicate that both high levels of ambulance diversion and simultaneous diversion across hospitals are associated with increasing numbers of deaths from AMI.
Prices are typically used as proxies for countries' export quality. I relax this strong assumption by exploiting both price and quantity information to estimate the quality of products exported to the U.S. Higher quality is assigned to products with higher market shares conditional on price. The estimated qualities reveal substantial heterogeneity in product markets' scope for quality differentiation, or their "quality ladders." I use this variation to explain the heterogeneous impact of low-wage competition on U.S. manufacturing employment and output.
Power — asymmetric control over valued resources — is a fundamental dimension of social relations. Classical conceptualizations of power emphasize its conscious nature. In this review, we reveal how power often operates nonconsciously and identify the different methods and paradigms used to activate or create a psychological sense of power outside of conscious awareness.
The banking legislation of the 1930s took very little time to pass, was unusually comprehensive, and unusually responsive to public opinion. Ironically, the primary motivations for the main bank regulatory reforms in the 1930s (Regulation Q, the separation of investment banking from commercial banking, and the creation of federal deposit insurance) were to preserve and enhance two of the most disastrous policies that contributed to the severity and depth of the Great Depression — unit banking and the real bills doctrine.
Paid placements on search engines reached sales of nearly $11 billion in the United States last year and represent the most rapidly growing form of online advertising today. In its classic form, a search engine sets up an auction for each search word in which competing websites bid for their sponsored links to be displayed next to the search results.
Based on the symbolic association between physical and moral purity, we introduce a provocative possibility: clean smells might not only regulate physical cleanliness, but may also motivate virtuous behavior. Indeed, moral transgressions can engender literal feelings of dirtiness (Zhong & Liljenquist, 2006). Just as many symbolic associations are reciprocally related (Lakoff, 1987), such as coldness and loneliness (Zhong & Leonardelli, 2008) or darkness and depravity (Frank & Gilovich, 1988), morality and cleanliness may also be reciprocally linked.
Wal-Mart has increasingly become the target of protests over its scale, manifested as contention over specific expansions. Often, the protests are local and led by local organizations, and as a result, chains face uncertainty whether local activists will organize a protest. We suggest that chain stores respond to this uncertainty through a "test for protest" approach. They use low-cost probes that take the form of proposals to open a store.
Although established money managers operate in an environment which seems com- petitive, they also seem to be very profitable. The present value of the expected future profits from managing a collection of funds is equal to the value of the assets under management times the profit margin, assuming that the managed funds will remain in business forever, zero asset flow into and out of the funds, zero excess returns net of trading costs, fixed management fee proportional to the assets under management and a fixed profit margin for the management company.
Research suggests that living in and adapting to foreign cultures facilitates creativity. The current research investigated whether one aspect of the adaptation process — multicultural learning — is a critical component of increased creativity. Experiments 1-3 found that recalling a multicultural learning experience: (a) facilitates idea flexibility (e.g., the ability to solve problems in multiple ways), (b) increases awareness of underlying connections and associations, and (c) helps overcome functional fixedness.
We document the first systematic evidence on the characteristics and economic consequences of firms subject to employee allegations of corporate financial misdeeds. First, compared to a control group that avoided public whistle-blowing allegations, firms subject to whistle-blowing allegations were characterized by unique firm-specific factors that led employees to expose alleged financial misdeeds.
We characterize the equilibrium behavior in a broad class of competition models in which the competing firms' market shares are given by an attraction model, and the aggregate sales in the industry depend on the aggregate attraction value according to a general function. Each firm's revenues and costs are proportional with its expected sales volume, with a cost rate that depends on the firm's chosen attraction value according to an arbitrary increasing function.