Synthetically Controlled Bandits
We consider experimentation in settings where, due to interference or other concerns, experimental units are coarse. ‘Region-split’ experiments on online platforms, where an intervention is applied to a single region over some experimental horizon, are one example of such a setting. Synthetic control is the state-of-the-art approach to inference in such experiments. The cost of these experiments is high since the opportunity cost of a sub-optimal intervention is borne by an entire region over the length of the experiment.
Thriving under pressure: The effects of stress-related wise interventions on affect, sleep, and exam performance for disadvantaged college students
Nearly all students experience stress as they pursue important academic goals. Because stress can be magnified for students from disadvantaged backgrounds, it becomes important to identify interventions that can help mitigate this stress, particularly for these populations as they enter academic environments. We examine the effects of stress mindset and stress management interventions administered to students from disadvantaged backgrounds (N = 140) before freshman year.
Do Socially Responsible Firms Walk the Talk?
Several firms claim to be socially responsible. We confront these claims with the data using the most notable such proclamation in recent years, the August 2019 Statement on the Purpose of a Corporation by the Business Roundtable (BRT). The BRT is a large, deeply influential business group containing many of America’s largest firms; the 2019 Statement proclaimed that a corporation’s purpose is to deliver value to all stakeholders, rather than to solely maximize shareholder value.
Welfare Consequences of Sustainable Finance
We model the welfare consequences of portfolio mandates that restrict investors to hold firms with net-zero carbon emissions. To qualify for these mandates, value-maximizing firms have to accumulate decarbonization capital. Qualification lowers a firm’s required rate of return by its decarbonization investments divided by Tobin’s q, i.e., the dividend yield shareholders forgo to address the global-warming externality.
The Endowment Model and Modern Portfolio Theory
We develop a dynamic portfolio-choice model with illiquid alternative assets to analyze conditions under which the "Endowment Model," used by some large institutional investors such as university endowments, does or does not work. The alternative asset has a lock-up, but can be voluntarily liquidated at any time at a cost. Quantitatively, our model's results match the average level and cross-sectional variation of university endowment funds' spending and asset allocation decisions.
Strategic Bank Liability Structure Under Capital Requirements
Banks strategically choose and dynamically restructure deposits and nondeposit debt in response to the minimum requirements on total capital and tangible equity. We derive the optimal strategic liability structure and show that it minimizes the protection for deposits conditional on capital requirements. Although, given any liability structure, regulators can set capital requirements high enough to remove the incentive for risk substitution, the strategic response to the capital requirements always preserves this incentive.
The Value of Data Records
Many e-commerce platforms use buyers' personal data to intermediate their transactions with sellers. How much value do such intermediaries derive from the data record of each single individual? We characterize this value and find that one of its key components is a novel externality between records, which arises when the intermediary pools some records to withhold the information they contain. Ignoring this can significantly bias the evaluations of data records.
Flattening the Curve: Pandemic-Induced Revaluation of Real Estate
We show that the COVID-19 pandemic brought house price and rent declines in city centers, and price and rent increases away from the center, thereby flattening the bid-rent curve in most U.S. metropolitan areas. Across MSAs, the flattening of the bid-rent curve is larger when working from home is more prevalent, housing markets are more regulated, and supply is less elastic. Housing markets predict that urban rent growth will exceed suburban rent growth for the foreseeable future.
Managing with Style? Micro-Evidence on the Allocation of Managerial Attention
How does task expertise affect the allocation of attention?
Private or public equity? The evolving entrepreneurial finance landscape
The US entrepreneurial finance market has changed dramatically over the last two decades. Entrepreneurs who raise their first round of venture capital retain 30% more equity in their firm and are more likely to control their board of directors. Late-stage start-ups are raising larger amounts of capital in the private markets from a growing pool of traditional and new investors. These private market changes have coincided with a sharp decline in the number of firms going public—and when firms do go public, they are older and have raised more private capital.
The Economic Effects of Immigration Pardons: Evidence from Venezuelan Entrepreneurs
This paper shows that providing undocumented immigrants with an immigration pardon, or amnesty, increases their economic activity in the form of higher entrepreneurship. Using administrative census data linked to the complete formal business registry, we study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a pardon. Our identification uses quasi-random variation in the amount of time available to get the pardon, introducing a novel regression discontinuity approach to study this policy.
Why active management makes sense in bonds for institutions
Equity investors have been shifting away from actively managed funds to passive strategies for decades. Passification, if that is a word, has been slower to take off in fixed-income strategies, though.