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.
We consider the problem of nonparametric estimation of signal singularities from indirect and noisy observations. Here by singularity, we mean a discontinuity (change-point) of the signal or of its derivative. The model of indirect observations we consider is that of a linear transform of the signal, observed in white noise. The estimation problem is analyzed in a minimax framework. We provide lower bounds for minimax risks and propose rate-optimal estimation procedures.
We focus on the problem of adaptive estimation of signal singularities from indirect and noisy observations. A typical example of such a singularity is a discontinuity (change-point) of the signal or of its derivative. We develop a change-point estimator which adapts to the unknown smoothness of a nuisance deterministic component and to an unknown jump amplitude. We show that the proposed estimator attains optimal adaptive rates of convergence. A simulation study demonstrates reasonable practical behavior of the proposed adaptive estimates.
We consider a revenue management, network capacity control problem in a setting where heterogeneous customers choose among the various products offered by a firm (e.g., different flight times, fare classes, and/or routings). Customers may therefore substitute if their preferred products are not offered. These individual customer choice decisions are modeled as a very general stochastic sequence of customers, each of whom has an ordered list of preferences. Minimal assumptions are made about the statistical properties of this demand sequence.
A German broker's clients place similar speculative trades and therefore tend to be on the same side of the market in a given stock during a given day, week, month, and quarter. Aggregate liquidity effects, short sale constraints, the systematic execution of limit orders (coordinated through price movements) or the correlated trading of other investors who pick off retail limit orders, do not fully explain why retail investors trade similarly. Correlated market orders lead returns, presumably due to persistent speculative price pressure.
This study investigates the effects of prior experience, task instruction, and choice on creative performance. Although extant research suggests that giving people choice in how they approach a task could enhance creative performance, we propose that this view needs to be circumscribed.
This paper examines coworker networks in the American, Chinese, German, and Spanish divisions of a global retail bank. Because the bank has standardized structure and policies across countries, it is possible to examine how norms rooted in national culture impact on various features of informal ties. We propose that cultures vary in the models on which coworker interaction norms are based, with market, family, law, and friendship relations serving as alternative templates.
Purpose — The purpose of this research is to examine how consumers form beliefs and evaluate derivatives (e.g. handheld computers) and branded derivatives (e.g. Palm handheld computers). The aim is to study how consumers combine two categories (e.g. ?handheld products? and ?computers?) to form beliefs, how the similarity between the categories influences beliefs, how the addition of a brand changes beliefs, and how the presence of brand associations impacts on evaluations.
The massive costs of health care ($1.7 trillion and counting) and the problems posed by various diseases (e.g., AIDS, obesity, diabetes, cancer, heart disease, mental illness) are well known and documented. People worry more about their personal health care costs than losing their jobs, being a victim of a violent crime, or terrorist attacks. As a consequence, massive efforts to improve knowledge about detection, prevention, and treatment have been undertaken. In addition, there is growing realization that health communication strategies need to be tailored to specific segments.
We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of sex offenders to exploit variation in the threat of crime within small homogeneous groupings of homes, and we use the timing of sex offenders' arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders' locations that are extremely localized.
Consider an economy in which the underlying security returns follow a linear factor model with constant coeffcients. While portfolios that invest in these securities will, in general, have a linear factor structure, it will be one with time-varying coeffcients. However, under certain assumptions regarding the portfolio's investment strategy, it is possible to estimate these time-varying alphas and betas.
A basket default swap is a derivative security tied to an underlying basket of corporate bonds or other assets subject to credit risk. The value of the contract depends on the joint distribution of the default times of the underlying assets. Valuing a basket default swap often entails Monte Carlo simulation of these default times. For baskets of high-quality credits and for swaps that require multiple defaults to trigger payment, pricing the swap is a rare-event simulation problem.
This paper develops rare-event simulation methods for the estimation of portfolio credit risk—the risk of losses to a portfolio resulting from defaults of assets in the portfolio. Portfolio credit risk is measured through probabilities of large losses, which are typically due to defaults of many obligors (sources of credit risk) to which a portfolio is exposed.
This article investigates the configuration of cognition- and affect-based trust in managers' professional networks, examining how these two types of trust are associated with relational content and structure. Results indicate that cognition-based trust is positively associated with economic resource, task advice, and career guidance ties, whereas affect-based trust is positively associated with friendship and career guidance ties but negatively associated with economic resource ties.
This essay analyzes the long-term lessons of the recent upturn and downturn in the telecommunications industry. It concludes that volatility and cyclicality will be an inherent part of the telecom sector in the future. To deal with such instabilities, companies and investors seek consolidation and cooperation. Government, too, is likely to stress stability more than before. Hence, an oligopoly is likely to emerge as the equilibrium market structure, and with it some regulation.
A wealth of research has found that power leads to behavioral approach and action. Four experiments demonstrate that this link between power and approach is broken when the power relationship is illegitimate. When power was primed to be legitimate or when power positions were assigned legitimately, the powerful demonstrated more approach than the powerless. However, when power was experienced as illegitimate, the powerless displayed as much approach as, or even more approach than, the powerful.
Recent evidence suggests that many organizational members and leaders are seen as under- or over-assertive by colleagues, suggesting that having the "right touch" with interpersonal assertiveness is a meaningful and widespread challenge. In this article, I review emerging work on the curvilinear relation between assertiveness and effectiveness, including evidence from both qualitative descriptions of coworkers and ratings of colleagues and leaders.
This paper considers a profit maximizing make-to-order manufacturer that offers multiple products to a market of price and delay sensitive users, using a model that captures three aspects of particular interest: first, the joint use of dynamic pricing and leadtime quotation controls to manage demand; second, the presence of a dual sourcing mode that can expedite orders at a cost; and third, the interaction of the aforementioned demand controls with the operational decisions of sequencing and expediting that the firm must employ to optimize revenues and satisfy the quoted leadtimes.
We present six experiments that tested whether lacking control increases illusory pattern perception, which we define as the identification of a coherent and meaningful interrelationship among a set of random or unrelated stimuli. Participants who lacked control were more likely to perceive a variety of illusory patterns, including seeing images in noise, forming illusory correlations in stock market information, perceiving conspiracies, and developing superstitions.
Four experiments explored whether lacking power impairs executive functioning, testing the hypothesis that the cognitive presses of powerlessness increase vulnerability to performance decrements during complex executive tasks. In the first three experiments, low power impaired performance on executive-function tasks: The powerless were less effective than the powerful at updating (Experiment 1), inhibiting (Experiment 2), and planning (Experiment 3).
In this paper, we discuss earnings quality and the related concept of earnings management, focusing on the primary financial accounts. For each key line-item from the financial statements, we summarize accounting and economic considerations applicable to that item, discuss implications for earnings quality, evaluate the susceptibility of the item to manipulation, and identify potential red flags. The red flags and specific issues discussed for the individual line-items provide a framework for fundamental and contextual analysis by academic researchers and practitioners.
This article explores the use of marketing metrics by a sample of Vietnamese firms, providing an example of the use of marketing metrics in a "transition" economy as it grows and becomes more market and marketing driven. The analysis reports usage frequency and then develops a set of "correlation chains" linking firm characteristics, metric use, and various indicators of performance. Vietnamese managers generally report that several types of metrics are used. Ownership structure and industry also impact which metrics are utilized.
The pressure to meet/beat analysts' expectations is often blamed for the recent onslaught of accounting scandals. We investigate changes in the meeting/beating phenomenon post-scandals and find that the stock market premium to meeting or just beating analyst estimates has disappeared while the premium to beating by a larger margin has diminished. In the post-scandals period, managers tend to meet or just beat analysts' forecasts less often. Further, managers rely less on income-increasing discretionary accruals and more on earnings guidance.
We model the commercial World Wide Web as a directed graph that emerges as the equilibrium of a game in which utility maximizing websites purchase (advertising) in-links from each other while also setting the price of these links. In equilibrium, higher content sites tend to purchase more advertising links (mirroring the Dorfman-Steiner rule) while selling less advertising links themselves.
Gallego et al. [Gallego, G., G. Iyengar, R. Phillips, A. Dubey. 2004. Managing flexible products on a network. CORC Technical Report TR-2004-01, Department of Industrial Engineering and Operations Research, Columbia University, New York.] recently proposed a choice-based deterministic linear programming model (CDLP) for network revenue management (RM) that parallels the widely used deterministic linear programming (DLP) model.
This special issue of Production and Operations Management offers a sample of ongoing research that focuses currently on the services industries. The articles selected cover a spectrum of application areas as well as methodologies.
A common feature of managerial and financial reporting is an iterative process wherein various parties selectively correct particular measurements by challenging them and subjecting them to increased scrutiny. We model this feature by adding an agent appeal stage to the standard moral hazard model and show that it can be optimal to allow the agent to decide which performance measures to appeal, despite the agent's incentive to cherry-pick. In the presence of measurement errors, the agent is incentivized by increased opportunities for cherry-picking that arise if he chooses the "right" vs.
Nine studies demonstrated that perspective-takers are particularly likely to adopt a target's positive and negative stereotypical traits and behaviors. Perspective-takers rated both positive and negative stereotypic traits of targets as more self-descriptive. As a result, taking the perspective of a professor led to improved performance on an analytic task, whereas taking the perspective of a cheerleader led to decreased performance, in line with the respective stereotypes of professors and cheerleaders.
We consider the risk of a portfolio comprising loans, bonds, and financial instruments that are subject to possible default. In particular, we are interested in performance measures such as the probability that the portfolio incurs large losses over a fixed time horizon, and the expected excess loss given that large losses are incurred during this horizon.
Objectification has been defined historically as a process of subjugation whereby people, like objects, are treated as means to an end. The authors hypothesized that objectification is a response to social power that involves approaching useful social targets regardless of the value of their other human qualities. Six studies found that under conditions of power, approach toward a social target was driven more by the target's usefulness, defined in terms of the perceiver's goals, than in low-power and baseline conditions.
Although power is often conceptualized as the capacity to influence others, the current research explores whether power psychologically protects people from influence.
Volatility is the key variable in option pricing models and for risk management in general. Not surprisingly, this has led to the recognition that volatility uncertainty is an important risk factor. This realization, in turn, has given rise to derivative instruments tied to volatility, such as variance swaps, volatility swaps, and options on both variance and volatility, which are specifically designed to help manage this risk. To price these contracts, a model is needed for the volatility process.
Individuals engage in status self-enhancement when they form an overly positive perception of their status in a group. We argue that status self-enhancement incurs social costs and, therefore, most individuals perceive their status accurately. In contrast, theories of positive illusions suggest status self-enhancement is beneficial for the individual and that most individuals overestimate their status. We found supportive evidence for our hypotheses in a social relations analysis of laboratory groups, an experiment that manipulated status self-enhancement, and a study of real-world groups.
We examine racial preferences in dating. We employ a Speed Dating experiment that allows us to directly observe individual decisions and thus infer whose preferences lead to racial segregation in romantic relationships. Females exhibit stronger racial preferences than males. The richness of our data further allows us to identify many determinants of same-race preferences. Subjects' backgrounds, including the racial composition of the ZIP code where a subject grew up and the prevailing racial attitudes in a subject's state or country of origin, strongly influence same-race preferences.
Many primary care offices and other medical practices regularly experience long backlogs for appointments. These backlogs are exacerbated by a significant level of last-minute cancellations or "no-shows," which have the effect of wasting capacity. In this paper, we conceptualize such an appointment system as a single-server queueing system in which customers who are about to enter service have a state-dependent probability of not being served and may rejoin the queue.
The profitability of remanufacturing systems for different cost, technology, and logistics structures has been extensively investigated in the literature. We provide an alternative and somewhat complementary approach that considers demand-related issues, such as the existence of green segments, original equipment manufacturer competition, and product life-cycle effects. The profitability of a remanufacturing system strongly depends on these issues as well as on their interactions.
We analyze a planning model for a firm or public organization that needs to cover uncertain demand for a given item by procuring supplies from multiple sources. Each source faces a random yield factor with a general probability distribution. The model considers a single demand season. All supplies need to be ordered before the start of the season. The planning problem amounts to selecting which of the given set of suppliers to retain, and how much to order from each, so as to minimize total procurement costs while ensuring that the uncertain demand is met with a given probability.
Hierarchy is such a defining and pervasive feature of organizations that its forms and basic functions are often taken for granted in organizational research. In this review, we revisit some basic psychological and sociological elements of hierarchy and argue that status and power are two important yet distinct bases of hierarchical differentiation. We first define power and status and distinguish our definitions from previous conceptualizations. We then integrate a number of different literatures to explain why status and power hierarchies tend to be self-reinforcing.
The newsvendor model captures the trade-off faced by a decision maker that needs to place a firm bet prior to the occurrence of a random event. Previous research in operations management has mostly focused on deriving the decision that minimizes the expected mismatch costs. In contrast, we present two methods that estimate the unobservable cost parameters characterizing the mismatch cost function. We present a structural estimation framework that accounts for heterogeneity in the uncertainty faced by the newsvendor as well as in the cost parameters.
Competing organizations are often defined by their niche overlap or structural equivalence in resource dependence, but the very structure that defines competitors can also identify cooperators. There is a fine line between competition and cooperation, but current theories give insufficient guidance as to which will take place and also contribute to the belief that cooperation between competitors is illegitimate. We show that the legitimacy of these practices, as well the evaluation of their welfare implications, are context bound.