Columbia Business School Research

Understanding country differences in temporal discounting is critical for extending incentive-based environmental policies successfully from developed countries to developing countries. We examined differences between Chinese and Americans in discounting of future financial and environmental gains and losses. In general, environmental use value was discounted significantly more than the monetary values, but environmental existence value was discounted similarly to the monetary values. Confirming previous research, we found that participants discounted gains significantly more than losses.

The article describes the potential negative consequences of the courses about academia, and especially the danger of weakening research and the innovation system of research universities. The MOOC courses may disrupt the structure of higher education because their business model is effective in de-linking the three components of an active University: teaching, research, and approval of credit for degree-granting courses. In the end, the article offers universities several ways to deal with the negative consequences of these MOOC courses.

Tens of millions of people are currently choosing health coverage on a state or federal health insurance exchange as part of the Patient Protection and Affordable Care Act. We examine how well people make these choices, how well they think they do, and what can be done to improve these choices. We conducted 6 experiments asking people to choose the most costeffective policy using websites modeled on current exchanges. Our results suggest there is significant room for improvement.

We study a scenario in which a firm designs the compensation contract for a salesperson who exerts unobservable effort to increase the level of uncertain demand and, jointly, the firm also decides the inventory level to be stocked. We use a newsvendor-type model in which actual sales depend on the realized demand but are limited by the inventory available, and unfulfilled demand cannot be observed. In this setup, under the optimal contract, the agent is paid a bonus for meeting a sales quota.

This paper presents a framework for addressing normative accounting issues for reporting to shareholders. The framework is an alternative to the emerging Conceptual Framework of the International Accounting Standards Board and the Financial Accounting Standards Board. The framework can be broadly characterized as a utilitarian approach to accounting standard setting. It has two main features. First, accounting is linked to valuation models under which shareholders use accounting information to values their stakes.

Over-the-counter (OTC) stocks are far less liquid, disclose less information, and exhibit lower institutional holdings than listed stocks. We exploit these different market conditions to test theories of cross-sectional return premiums. Compared to premiums in listed markets, the OTC illiquidity premium is several times higher, the size, value, and volatility premiums are similar, and the momentum premium is three times lower.

Historical cost accounting deals with uncertainty by deferring the recognition of earnings until the uncertainty has largely been resolved. Such accounting affects both earnings and book value and produces expected earnings growth deemed to be at risk. This paper shows that the earnings-to-price and book-to-price ratios that are the product of this accounting forecast both earnings growth and the risk to that growth.

It has been observed that ad-evoked feelings exert a positive influence on brand attitudes. To investigate the empirical generalizability of this phenomenon, we analyzed the responses of 1,576 consumers to 1,070 TV commercials from more than 150 different product categories. The findings suggest five empirical generalizations. First, ad-evoked feelings indeed have a substantial impact on brand evaluations, even under conditions that better approximate real marketplace settings than past studies did.

We propose that the psychological states individuals bring into newly formed groups can produce meaningful differences in status attainment. Three experiments explored whether experimentally created approach-oriented mindsets affected status attainment in groups, both immediately and over time. We predicted that approach-oriented states would lead to greater status attainment by increasing proactive behavior.

In transitions from state socialism, property rights are re-allocated to organizations and groups, creating new markets and new forms of economic enterprise that reshape the stratification order. A generation of research has estimated individual-level outcomes with income equations and mobility models, relying on broad assumptions about economic change. We redirect attention to the process of economic change that structures emerging markets.

Previous research suggests that there is a fundamental link between expansive body postures and feelings of power. The current research demonstrates that this link is not universal, but depends on people's cultural background (Western versus East Asian) and on the particular type of expansive posture enacted. Three types of expansive postures were examined in the present studies: the expansive-hands-spread-on-desk pose (Carney et al., 2010), the expansive-upright-sitting pose, and the expansive-feet-on-desk pose (Carney et al., 2010).

How likely is a catastrophic event that would substantially reduce the capital stock, GDP, and wealth? How much should society be willing to pay to reduce the probability or impact of a catastrophe? We answer these questions and provide a framework for policy analysis using a general equilibrium model of production, capital accumulation, and household preferences.

Hedge fund managers trade o the benefits of leveraging on the alpha-generating strategy against the costs of inefficient fund liquidation. In contrast to the standard risk-seeking intuition, even with a constant-return-to-scale alpha-generating strategy, a risk-neutral manager becomes endogenously risk-averse and decreases leverage following poor performance to increase the fund's survival likelihood. Our calibration suggests that management fees are the majority of the total compensation.

In this study of the impact of protests against Walmart (a first entrant) on Target (a second entrant) from 1998 to 2008 in U.S. geographic markets, we develop and test a theory of information spillovers from protests against corporations proposing to enter a new market. We argue that the number of protests directed against a first entrant is a noisy signal for the second entrant because such protests are likely to be dominated by protest-prone activists and so do not reflect the sentiments of the community.

In this study of the impact of protests against Walmart (a first entrant) on Target (a second entrant) from 1998 to 2008 in U.S. geographic markets, we develop and test a theory of information spillovers from protests against corporations proposing to enter a new market. We argue that the number of protests directed against a first entrant is a noisy signal for the second entrant because such protests are likely to be dominated by protest-prone activists and so do not reflect the sentiments of the community.

If individuals buy a Snickers bar and subsequently see their favorite basketball team begin to play better, they might attribute this improved performance to their purchase decision. Even as consumers acknowledge that this type of control is irrational, we demonstrate that they are willing to superstitiously alter their purchase behavior (by choosing a less-preferred option) in hopes of helping their favorite team.

Perspective taking is often the glue that binds people together. However, we propose that in competitive contexts, perspective taking is akin to adding gasoline to a fire: It inflames already-aroused competitive impulses and leads people to protect themselves from the potentially insidious actions of their competitors. Overall, we suggest that perspective taking functions as a relational amplifier.

The VIX, the stock market option-based implied volatility, strongly co-moves with measures of the monetary policy stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility (“uncertainty”), we find that a lax monetary policy decreases both risk aversion and uncertainty, with the former effect being stronger.

We present a theoretical model of reappropriation — taking possession of a slur previously used exclusively by dominant groups to reinforce another group's lesser status. Ten experiments tested this model and established a reciprocal relationship between power and self-labeling with a derogatory group term. We first investigated precursors to self-labeling: Group, but not individual, power increased participants' willingness to label themselves with a derogatory term for their group. We then examined the consequences of such self-labeling for both the self and observers.

Consumer psychology faces serious issues of internal and external relevance. Most of these issues originate in seven fundamental problems with the way consumer psychologists plan and conduct their research that could be called the seven sins of consumer psychology.

We use longitudinal, disease-level data to analyze the impact of pharmaceutical innovation on longevity and medical expenditure in Sweden, where mean age at death increased by 1.88 years during the period 1997-2010. Pharmaceutical innovation is estimated to have increased mean age at death by 0.60 years during the period. The estimates indicate that longevity depends on the number of drugs to treat a disease, not the number of drug classes.

Markets for information products exhibit varying degrees of competition on both the supply and the demand side. This paper studies the potential complementarity of information products, equilibrium information buying behaviors and information price setting in such markets. Our game-theoretic model consists of two information providers selling imperfect information to two competing clients and allows for different information quality levels as well as varying degrees of client competition.

Defaults have such powerful and pervasive effects on consumer behavior that they could be considered “hidden persuaders” in some settings. Ignoring defaults is not a sound option for marketers or consumer policy makers. The authors identify three theoretical causes of default effects—implied endorsement, cognitive biases, and effort—to guide thought on the appropriate marketer and policy maker responses to the issues posed for consumer welfare and consumer autonomy, including proposals for benign “nudges” of behavior.

Accusations of wrongdoing, baseless or justified, can severely tarnish a company's reputation. Once disseminated, even baseless accusations can persist and cause considerable damage for a company. This study examines the proactive crisis communication strategy of inoculating individuals against invalid accusations before they go viral. An experiment was conducted in a real world consumer context among members of an online consumer panel using an electronics discounter as the research stimulus.

We investigate the intrinsic motivation of individuals to report, and thereby sanction, fellow group members who lie for personal gain. We further explore the changes in lying and reporting behavior that result from giving individuals a say in who joins their group. We find that enough individuals are willing to report lies such that in fixed groups lying is unprofitable. However, we also find that when groups can select their members, individuals who report lies are generally shunned, even by groups where lying is absent.

We study the drivers of the emergence of opinion leaders in a networked community where users establish links to others, indicating their "trust" for the link receiver's opinion. This leads to the formation of a network, with high in-degree individuals being the opinion leaders. We use a dyad-level proportional hazard model with time-varying covariates to model the growth of this network. To estimate our model, we use Weighted Exogenous Sampling with Bayesian Inference, a methodology that we develop for fast estimation of dyadic models on large network data sets.

The ability to retain existing customers is a major concern for many businesses. However retention is not the only dimension of interest; the revenue stream associated with each customer is another key factor influencing customer profitability.

We experimentally study the common wisdom that money buys political influence. In the game, one special interest (i.e., a corporate firm) has the opportunity to influence redistributive tax policies in her favor by transferring money to two competing candidates. The success of the investment depends on whether or not the candidates are willing and able to collude on low-tax policies that do not harm their relative chances in the elections. In the experiment, successful political influence never materializes when the firm and candidates interact just once.

We posit that compared to the cognitive system, the affective system of judgment and decision making is relatively more engaged in the present. Specifically, we hypothesize that even if their accessibility is held constant, affective feelings are weighted more heavily in consumer judgments and decisions set in the present than in equivalent judgments and decisions set in the future or in the past.

Systemic risk is an issue of great concern in modern financial markets as well as, more broadly, in the management of complex systems. We propose an axiomatic framework for systemic risk. Our framework allows for an independent specification of (1) a functional of the cross-sectional profile of outcomes across agents in the system in a single scenario of nature, and (2) a functional of the profile of aggregated outcomes across scenarios of nature.

Although previous research has shown that making the first offer leads to a distributive advantage in negotiations, the current research explored how the timing of first offers affects the creativity of negotiation agreements. We hypothesized that making the first offer later rather than earlier in the negotiation would facilitate the discovery of creative agreements that better meet the parties' underlying interests. Experiment 1 demonstrated that compared with early first offers, late first offers facilitated creative agreements that better met the parties' underlying interests.

We analyze the role of retail investors in stock pricing using a database uniquely suited for this purpose. The data allow us to address selection bias concerns and to separately examine aggressive (market) and passive (limit) orders. Both aggressive and passive net buying positively predict firms' monthly stock returns with no evidence of return reversal. Only aggressive orders correctly predict firm news, including earnings surprises, suggesting they convey novel cash flow information.

This paper formally analyzes the biases related to self-reporting in hedge fund databases by matching the quarterly equity holdings of a complete list of 13F-filing hedge fund companies to the union of five major commercial databases of self-reporting hedge funds between 1980 and 2008. We find that funds initiate self-reporting after positive abnormal returns that do not persist into the reporting period. Termination of self-reporting is followed by both return deterioration and outflows from the funds.

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 to 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 a repeated newsvendor problem in which the decision-maker (DM) does not have access to the underlying distribution of discrete demand. We analyze three informational settings: i) the DM observes realized demand in each period; ii) the DM only observes realized sales; and iii) the DM observes realized sales but also a lost sales indicator that records whether demand was censored or not. We analyze the implications of censoring on performance and key characteristics that effective policies should possess.