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.
Failing to refinance a mortgage can cost a borrower thousands of dollars. Based on administrative data from a large financial institution, we show that around 50% of borrowers leave thousands of dollars on the table by not refinancing. Survey data indicate that, among all the behavioral factors examined, only suspicion of banks’ motives is consistently related to the probability of accepting a refinancing offer. Finally, we report the results of three field experiments showing that enticing offers made by banks fail to increase participation and may even deepen suspicion.
Failing to refinance a mortgage can cost a borrower thousands of dollars. Based on administrative data from a large financial institution, we show that around 50% of borrowers leave thousands of dollars on the table by not refinancing. Survey data indicate that, among all the behavioral factors examined, only suspicion of banks’ motives is consistently related to the probability of accepting a refinancing offer. Finally, we report the results of three field experiments showing that enticing offers made by banks fail to increase participation and may even deepen suspicion.
The authors present empirical evidence that borrowers, consciously or not, leave traces of their intentions, circumstances, and personality traits in the text they write when applying for a loan. This textual information has a substantial and significant ability to predict whether borrowers will pay back the loan above and beyond the financial and demographic variables commonly used in models predicting default.
Consumers often have multiple goals that are active simultaneously and make choices to satisfy those goals. However, no work to date has studied how people choose when all available options serve a goal (e.g., a choice-set goal) that conflicts with another goal they hold (e.g., an incidental goal). We demonstrate that in such contexts, consumers are more likely to choose the option that is most instrumental for attaining the choice-set goal, even when that option poses the greatest violation of the incidental goal.
Organizations often empower employees at all levels to propose innovation ideas that rely on their first-hand knowledge of their standard task (i.e. employee-initiated innovation). Many, however, struggle with motivating employees to develop innovative ideas that may benefit the firm, especially when the standard tasks for which employees are hired, measured and incentivized do not explicitly include innovation.
When deciding whether to buy an item, consumers sometimes think about other ways they could spend their money. Past research has explored how increasing the salience of outside options (i.e., alternatives not immediately available in the choice set) influences purchase decisions, but whether the type of alternative considered systematically affects buying behavior remains an open question. Ten studies find that relative to considering alternatives that are similar to the target, considering dissimilar alternatives leads to a greater decrease in purchase intent for the target.
Shadow bank market share in residential mortgage origination nearly doubled from 2007 to 2015, with particularly dramatic growth among online "fintech" lenders. We study how two forces, regulatory differences and technological advantages, contributed to this growth.
Internet recommender systems are popular in contexts that include heterogeneous consumers and numerous products. In such contexts, product features that adequately describe all the products are often not readily available. Content-based systems therefore rely on user-generated content such as product reviews or textual product tags to make recommendations.
Many modern business cycle models use uncertainty shocks to generate aggregate fluctuations. However, uncertainty is measured in a variety of ways. Our analysis shows that the measures are not the same, either statistically or conceptually, raising the question of whether fluctuations in them are actually generated by the same phenomenon. We propose a mechanism that generates realistic micro dispersion (cross-sectional variance of firm-level outcomes), higher-order uncertainty (disagreement) and macro uncertainty (uncertainty about macro outcomes) from changes in macro volatility.
Following the efficiency logic that argues process quality management provides an important basis for firms’ internal controls over their innovation activities, this study which is set within emerging markets extends the literature by shedding light upon an interesting phenomenon: employing process quality management reduces purchasing risk for potential customers by conveying valuable information regarding the firms who employ it (a symbolic logic argument).
We study the intertemporal properties of accounting conservatism with a focus on managerial incentives. In our main model, conservatism results in smaller expected payouts to the manager (agent) in early periods and larger expected payouts in later periods. Conservatism shifts (ambiguous) evidence that might be used to recognize good performance in early periods to later periods. In later periods, good performance is less informative, since good news might mean good current period performance and might also mean good prior period performance whose recognition was delayed.
Although the rates of economic inequality in the United States are at their highest since the onset of The Great Depression, many Americans do not seem as concerned as may be expected. This apparent lack of concern has been attributed to people's deeply-entrenched belief in economic mobility -- the belief that through hard work, determination, and skill people are able to rise up the economic ladder. Little is known, however, about why Americans so strongly believe in economic mobility.
Firms often finance their inventory through debt and subsequently sell it to generate profits and service the debt. Pricing of products is consequently driven by both inventory and debt servicing considerations. In the present paper, we analyze how debt distorts dynamic pricing decisions and reduces generated sales revenues. We show that debt induces sellers to always price higher than the revenue-maximizing price.
Selecting more productive employees among a pool of job applicants can be a cost-effective means of improving organizational performance and may be particularly important in the public sector. We study the relationship among applicant characteristics, hiring outcomes, and job performance for teachers in the Washington DC Public Schools. Applicants' academic background (e.g., undergraduate GPA) is essentially uncorrelated with hiring.
This article provides evidence about the impact that public and private research had on premature mortality and hospitalization due to cancer in the United States during the period 1999-2013. We estimate difference-in-differences models based on longitudinal, cancer-site-level data to determine whether the cancer sites about which more research-supported articles were published had larger subsequent reductions in premature mortality and hospitalization during the period 1999 to 2013, controlling for the change in the number of people diagnosed.
This study provides econometric evidence about the impact that new chemical entity (NCE) launches had on premature mortality from 17 diseases in 9 Middle Eastern and African countries during the period 2007–2015.
The greater the relative number of NCEs for a disease launched in a country, the greater the subsequent relative decline in premature mortality from that disease, controlling for the average rate of mortality decline in each country and from each disease.
People can be surprisingly insensitive to quantities in valuation judgments—a phenomenon called scope insensitivity, which is generally attributed to the operation of affective processes in judgment. Building on research showing that affect is inherently a decision-making system of the present, we propose that scope insensitivity is more likely to be observed in decisions that are psychologically proximate to the immediate self.
Two modern economic trends are the increase in firm size and advances in information technology. We explore the hypothesis that big data disproportionately benefits big firms. Because they have more economic activity and a longer firm history, large firms have produced more data. As processor speed rises, abundant data attracts more financial analysis. Data analysis improves investors’ forecasts and reduces equity uncertainty, reducing the firm’s cost of capital. When investors can process more data, large firm investment costs fall by more, enabling large firms to grow larger.
Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates.
This study employs a two-way fixed effects research design to measure the mortality impact and cost-effectiveness of cancer drugs: It analyzes the correlation across 36 countries between the relative mortality from 19 types of cancer in 2015 and the relative number of drugs previously launched in that country to treat that type of cancer, controlling for relative incidence.
Many service systems have servers with different capabilities and customers with varying needs. One common way this occurs is when servers are hierarchical in their skills or in the level of service they can provide. Much of the literature studying such systems relies on an understanding of the relative costs and benefits associated with serving different customer types by the different levels of service. In this work, we focus on estimating these costs and benefits in a complex healthcare setting where the major differentiation among server types is the intensity of service provided.
Many service systems have servers with different capabilities and customers with varying needs. One common way this occurs is when servers are hierarchical in their skills or in the level of service they can provide. Much of the literature studying such systems relies on an understanding of the relative costs and benefits associated with serving different customer types by the different levels of service. In this work, we focus on estimating these costs and benefits in a complex healthcare setting where the major differentiation among server types is the intensity of service provided.
Using the staggered adoption of universal demand (UD) laws in the United States, we study the effect of shareholder litigation risk on corporate disclosure. We find that disclosure significantly increases after UD laws make it more difficult to file derivative lawsuits. Specifically, firms issue more earnings forecasts and voluntary 8-K filings, and increase the length of management discussion and analysis (MD&A) in their 10-K filings. We further assess the direct and indirect channels through which UD laws affect firms' disclosure policies.
Assessment of the impact that pharmaceutical innovation (the Russian launch of new cancer drugs) and cancer incidence had on cancer mortality in Russia during the period 2001–2011.
Investigation of whether the decline in mortality was greater for cancer sites (breast, lung, colon, etc.) subject to more pharmaceutical innovation and greater declines in incidence.
Inquiry into CSR as a human capital management tool has suggested that firms benefit from such activities because employees value the meaningfulness of these activities, which influences motivation and retention. We propose an alternate avenue through which firms can benefit from an important type of socially responsible activity — pro bono services — that does not require that employees derive utility from the meaningfulness of the activity.
We find that voters who associate themselves with the "winning team" in election, i.e., Leave voters in the 2016 UK Brexit vote and Trump voters in 2016 US presidential election, substantially increase their expectations for the stock market, but change their expectations of their household economic wellbeing only modestly. Respondents who associate themselves with the "losing team" are more varied in their responses, but the overall impact of the election outcome on this group is more muted.
Expectancies play an important and understudied role in influencing a negotiator's decision to be deceptive. Studies 1a–1e investigated the sources of negotiators' expectancies, finding evidence of projection and pessimism; negotiators consistently overestimated the prevalence of people who share their views on deception and assumed a sizable share of others embrace deceptive tactics. This phenomenon generalized beyond American samples to Chinese students (Study 1d) and Turkish adults (Study 1e).
Expectancies play an important and understudied role in influencing a negotiator's decision to be deceptive. Studies 1a–1e investigated the sources of negotiators' expectancies, finding evidence of projection and pessimism; negotiators consistently overestimated the prevalence of people who share their views on deception and assumed a sizable share of others embrace deceptive tactics. This phenomenon generalized beyond American samples to Chinese students (Study 1d) and Turkish adults (Study 1e).
Objective:
We sought to build on the template-matching methodology by incorporating longitudinal comorbidities and acute physiology to audit hospital quality.
Study Setting:
Patients admitted for sepsis and pneumonia, congestive heart failure, hip fracture, and cancer between January 2010 and November 2011 at 18 Kaiser Permanente Northern California hospitals.
Study Design:
I study a single-agent sequential search problem as in Weitzman. Contrary to Weitzman, conditional on stopping, the agent may take any uninspected box without first inspecting its contents. This introduces a new trade-off. By taking a box without inspection, the agent saves on its inspection costs. However, by inspecting it, he may discover that its contents are lower than he anticipated. I identify sufficient conditions on the parameters of the environment under which I characterize the optimal policy.
Unplanned transfers of patients from general medical-surgical wards to the Intensive Care Unit (ICU) may occur due to unexpected patient deterioration. Such patients tend to have higher mortality rates and longer lengths of stay than direct admits to the ICU. A new predictive model, the EDIP2, was developed with the intent to identify patients at risk for deterioration, which in some cases could trigger a proactive transfer to the ICU. While it is conceivable that proactive transfers could improve individual patient outcomes, they could also lead to ICU congestion.
This paper documents how life cycle wage growth varies across countries. We harmonize repeated cross-sectional surveys from a set of countries of all income levels and then measure how wages rise with potential experience. Our main finding is that experience-wage profiles are on average twice as steep in rich countries as in poor countries. In addition, more educated workers have steeper profiles than the less educated; this accounts for around one-third of cross-country differences in aggregate profiles.
We examine the effects of financial reporting regulation on firms' banking. Exploiting discontinuous public disclosure and auditing requirements assigned to otherwise similar small and medium-sized private firms, we document that financial reporting regulation reduces firms' reliance on concentrated and local bank relationships and increases banks' reliance on firms' financial reporting, consistent with a shift in firms' banking from relationship toward transactional approaches.
Objective:
To understand the impact of adding a medical step-down unit (SDU) on patient outcomes and throughput in a medical intensive care unit (ICU).
Design:
Retrospective cohort study.
Setting:
Two academic tertiary care hospitals within the same health-care system.
Patients:
Adults admitted to the medical ICU at either the control or intervention hospital from October 2013 to March 2014 (preintervention) and October 2014 to March 2015 (postintervention).
When companies plan to build multi-category brands by adding new products to their product lines, two questions loom large: (1) whether and (2) when brand extensions perceived as distant (comparatively dissimilar) from the company’s existing core line of products should be introduced. Since many real-world firms have introduced distant brand extensions, this paper focuses on the second question: when the company should introduce a distant extension within a series of other closer extensions — a decision for which there is little research-based guidance for managers.
The paper draws on Mohanty and Sundaresan (2018) to explore the effects of bankruptcy laws on the ex ante incentive for firms to hedge FX exposures. We use a simple model in which the bankruptcy code may result in deadweight losses, and may allow equity holders a share of residual value of the firm's assets in the bankruptcy proceedings. The paper predicts that, while value-maximising firms promise to hedge a higher fraction of the value of their FX exposure when the debt is issued, they may renege subsequently and take on some FX exposures at the expense of foreign creditors.
In today's turbulent business environment, customer retention presents a significant challenge for many service companies. Academics have generated a large body of research that addresses part of that challenge — with a particular focus on predicting customer churn. However, several other equally important aspects of managing retention have not received a similar level of attention, leaving many managerial problems not completely solved, and a program of academic research not completely aligned with managerial needs.
The current research explores the relationship between living abroad and self-concept clarity. We conducted six studies (N = 1,874) using different populations (online panels and MBA students), mixed methods (correlational and experimental), and complementary measures of self-concept clarity (self-report and self-other congruence through 360-degree ratings). Our results indicate that living abroad leads to a clearer sense of self because it prompts self-discerning reflections on whether parts of their identity truly define who they are or merely reflect their cultural upbringing.
Although women pursue managerial credentials at nearly the same rate as men, gender disparities in wages exist because of the shortfall in wages women sustain relative to men at the onset of their careers. This article develops a tryout approach to test for the presence of demand-side contributions to initial wage inequality while also developing and testing theory on why it may be lessened through internships.
The authors examine how consumers respond to pseudo-free offers--offers that are presented to consumers as free but that require consumers to make a nonmonetary payment (such as completing a survey or providing personal information) in order to receive the "free" good or service. Across six studies, the authors find that consumers are generally just as likely to accept pseudo-free offers (with nonmonetary costs) as comparable truly free offers (with no costs), as long as the costs of the pseudo-free offers are below some threshold.
We provide a framework for identifying accounting numbers that indicate risk and expected return. Under specified accounting conditions for measuring earnings and book value, book-to-price (B/P) indicates expected returns, providing justification for B/P in asset pricing models. However, the framework also points to earnings-to-price (E/P) as a risk characteristic. Indeed, E/P, rather than B/P, is the relevant characteristic when there is no expected earnings growth, but the weight shifts to B/P with growth.
We extend latent Dirichlet allocation by introducing a topic model, hierarchically dual latent Dirichlet allocation (HDLDA), for contexts in which one type of document (e.g., search queries) are semantically related to another type of document (e.g., search results). In the context of online search engines, HDLDA identifies not only topics in short search queries and web pages, but also how the topics in search queries relate to the topics in the corresponding top search results.
Geographic price discrimination is generally considered beneficial to firm profitability. Firms can extract higher rents by varying prices across markets to match consumers' preferences. This paper empirically demonstrates, however, that a firm may instead prefer a national pricing policy that fixes prices across geographic markets, foregoing the opportunity to customize prices. Under appropriate conditions, a national pricing policy helps avoid intense local competition due to targeted prices.
The most effective behavioral policies are often also the most contentious. Psychologically informed interventions that promote non-deliberative behaviors ("nudges") are often more effective than "traditional" policies (like informational and educational campaigns) that target more deliberative processes. Yet, precisely because of their deliberative nature, people are often said to prefer the latter over the former.
In incentive-aligned choice experiments, each decision is realized with some probability, Prob. In three eye-tracking experiments, we study the impact of varying Prob from 0 (as in purely hypothetical choices) to 1 (as in real-life choices) on attention, information processing, and choice. Consistent with the bounded rationality literature, we find that as Prob increases from 0 to 1, consumers process the choice-relevant information more carefully and more comprehensively.
Marketing managers are responsible for understanding and predicting customer purchasing activity. This task is complicated by a lack of knowledge of all of the calendar time events that influence purchase timing. Yet, isolating calendar time variability from the natural ebb and flow of purchasing is important for accurately assessing the influence of calendar time shocks to the spending process, and for uncovering the customer-level purchasing patterns that robustly predict future spending.
On search keywords with trademarked terms, the brand owner ("focal brand") and other relevant firms compete for consumers. For the focal brand, paid clicks have a direct substitute in the organic links below the paid ad(s). The proximity of this substitute depends on whether competing firms are bidding aggressively to siphon off traffic. We study the returns to focal brands and competitors using large-scale experiments on Bing with data from thousands of brands.