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Research Colloquia

 

 

The Research Colloquium provides a forum for interaction among faculty, students, and visitors interested in the applications of business and management. The colloquium includes presentations by faculty from UC Irvine and other universities, as well as research institutes.

Colloquia Events are open to the public unless otherwise noted; please see event description for more details. 

characterize when this competitive effect leads the seller to prefer to sell the assets together rather than individually.

 

 

 

(Host:Sharon Koppman)

 

Friday, October 30, 2015


Explaining Identification with Relatively Low-Prestige Collectives: A Study of Nascar Fans

 

SPEAKER: Kimberly Elsbach

UNIVERSITY: University ofCalifornia, Davis

TIME: 2:30pm-5:30pm

 

ABSTRACT:

Through a series of studies, we examined why fans identified with the relatively low prestige collective known as NASCAR (National Association for Stock Car Auto Racing). Anecdotal evidence and our own pilot research indicated that NASCAR was viewed as relatively low in “Perceived External Prestige” (a validated measure that has been shown to be the strongest predictor of collective identification across dozens of empirical studies) compared to most collectives in empirical studies of identification.  In a first study, involving qualitative analysis of archival data, interviews, and observation of NASCAR experts and fans, we found evidence that identification with NASCAR was predicted, primarily, by what we call fan’s “Perceived Opportunity for Authentic Self-Expression” with NASCAR (i.e., the perception that fans could be their “true selves” when interacting with NASCAR). Further, we found that NASCAR fans identified with the collective because it provided the opportunity to self-express in relation to the specific value of “patriotism – which fans claimed was an important personal value that was difficult to affirm in other contexts.  In a second, longitudinal study, involving three large-scale surveys of NASCAR fans, we confirmed that fans’ identification with NASCAR was predicted more strongly by Perceived Opportunity for Authentic Self-Expression with NASCAR vs. Perceived External Prestige. In turn, identification with NASCAR predicted fans’ collective-supporting behaviors, such as watching NASCAR races and recommending NASCAR to friends.  Together, these findings suggest that individuals may strongly identify with relatively low-prestige collectives because those collectives allow them to express important, but difficult-to-affirm values that are part of their authentic or “true” selves. We discuss the implications of these findings for theories of collective identification.  

 

 

(Host: Professor Jone Pearce)

 

Monday, September 28, 2015


To Be or Not to Be Your Authentic Self? Catering to Others' Preferences Hinders Performance

 

SPEAKER: Laura Huang

UNIVERSITY: University of Pennsylvania

TIME: 10:00 am - 11:30 am

 

ABSTRACT:

Drawing from psychological research on morality, we examine how catering to another person’s interests and expectations in interpersonal first meetings (e.g., job interviews)—versus expressing authentic thoughts and feelings—influences performance (e.g., being offered the job). In two pilot studies, we find that most people use catering in an attempt to make a good impression, and believe that catering is most likely to lead to positive outcomes. However, across different organizational contexts, we find these lay beliefs to be wrong. First, in a field study in which entrepreneurs pitched their ideas to potential investors (Study 1), catering harmed investor evaluations, while being authentic improved them. In a laboratory study (Study 2), we examine why this performance difference may occur and find that people experience greater anxiety when they cater to another person’s preferences than when they behave authentically. Finally, in a second laboratory study (Study 3), we replicate the detrimental effect of catering on job interview performance, and we uncover two reasons for this effect. Compared to behaving authentically, catering harms performance because trying to anticipate and fulfill others’ preferences increases anxiety and feelings of inauthenticity. Taken together, these results suggest that although people believe using catering in interpersonal first meetings will lead to successful outcomes, the opposite is true: catering increases anxiety, creates undesirable feelings of inauthenticity for the caterer, and ultimately hinders performance.

 

 

 

 

(Host: Professor Luyi Gui)

 

Friday, June 5, 2015

 

The Effects of Sourcing Policies on a Supplier's Sustainable Practices 

 

SPEAKER: Professor Vishal V. Agrawal

UNIVERSITY: Georgetown University 

TIME: 10:00am - 11:30am

 

ABSTRACT: 

Firms are increasingly offering sustainable products in response to growing consumer demand for them. However, this requires sourcing sustainably produced parts from their suppliers. In this paper, we study how buyers (manufacturers or retailers) can use sourcing policies to influence their suppliers to adopt sustainable processes that meet certain sustainability criteria. We study two different sourcing policies commonly observed in practice. Under a Sustainable Preferred sourcing policy, a buyer agrees to buy sustainably produced parts from the supplier if available, but will otherwise buy conventionally produced ones. In contrast, under a Sustainable Required sourcing policy, the buyer will only buy parts if the supplier has adopted a sustainable process. We find that a buyer can use a Sustainable Required policy to induce the supplier to switch to a sustainable process, but adopting a Sustainable Preferred policy may actually deter switching. When there is buyer competition, we show that a buyer may choose either policy in equilibrium to differentiate her product from the competitor, even if it is not required to influence the supplier's process decision. Moreover, a buyer may use a Sustainable Preferred policy as a defensive competitive strategy to prevent her supplier and competitor from capturing value in the sustainable market.  Under supplier competition, the Sustainable Preferred policy has the same effect as the Required policy, i.e., it can be used to induce switching. Overall, our results show how a buyer can use her sourcing policy to influence a supplier's decision to switch to a sustainable process, and the resulting implications for the buyer's product positioning strategy in the downstream market. (Joint work with Deishin Lee)

 

 

(Host: Professor Mireille Jacobson)

 

Tuesday, June 2, 2015

 

The Efficiency of Slacking Off: Evidence from the Emergency Department

 

SPEAKER: Professor David Chan

UNIVERSITY: Stanford University

TIME: 3:00pm - 5:00pm

 

ABSTRACT:

Work schedules play an important role in utilizing labor in organizations. Studying emergency department physicians in shift work, I find two types of distortions induced by schedules. First, on an extensive margin, physicians “slack off” by accepting fewer patients near end of shift (EOS). Second, on an intensive margin, physicians distort patient care, incurring higher costs as they spend less time on patients accepted near EOS. I demonstrate a tradeoff between these two distortions, by examining how they change with shift overlap. Accounting for both costs of physician time and patient care, I find that physicians slack off at levels that approximately minimize the total cost of patient care and physician time (i.e., reducing slacking off would worsen efficiency).

 

 

 

(Host: Professor Jone Pearce)

 

Monday, June 1, 2015


Overqualification: An Asset or Liability in Hiring Decisions?

 

SPEAKER: Patricia Martinez

UNIVERSITY: Loyola Marymount University

TIME: 3:30 pm - 5:00 pm

 

ABSTRACT:

Does excess education or experience hinder an applicant’s selection for a job interview?  Depending upon the theoretical perspective adopted, possessing education or experience beyond a job’s requirements (over-qualification) can be perceived either as an asset or liability. The person-job fit literature suggests that overqualified applicants will be selected less often that those who exactly match the job requirements.  In contrast, human capital theory predicts that overqualified applicants will be selected as often as those who are exactly qualified. In this colloquium presentation, I will provide an overview of three studies where my colleagues and I examine how perceived over-qualification affects selection decisions. In Study 1 (Martinez, Lengnick-Hall & Kulkarni, 2014) we propose a conceptual model for conducting research on how Human Resource and hiring managers form impressions of overqualified individuals and how these impressions affect selection decisions. In Study 2 (Kulkarni, Lengnick-Hall & Martinez, 2014), based on a qualitative interview data analysis, we found that in most cases, managers are willing to interview and hire individuals whose education or experience exceeds a job’s requirements. Additionally, we propose a typology for categorizing applicant qualification levels and how these relate to human resource outcomes such as hiring decisions. Finally, In Study 3 (Martinez, Lengnick-Hall & Kulkarni, 2015), using a policy-capturing methodology, we simulated a resume screening process for interview selection. We found that possessing more related education or more related experience than required for a job does not lower the chances of obtaining an interview.

 

 

 

(Host: Professor Chong Huang)

 

Friday, May 29, 2015

 

Liquidity and Return Reversals

  

SPEAKER: Professor Kent Daniel

UNIVERSITY: Columbia University

TIME: 2:00 pm - 3:15 pm

 

ABSTRACT:

We estimate a short term reversal process for daily US equity returns. Over our primary sample period of 1972-2014, and for our sample of the 100 largest traded firms, on average approximately 90% of idiosyncratic price shocks are permanent. The remaining 10% is temporary, and decays exponentially toward zero, with a half life of about 2.5 days. While the rate of decay (the half life) is relatively constant over time, the magnitude decay varies considerably over the sample. Our findings are consistent with the slow movement of capital (Duffie 2010). Also, in contrast with previous literature, we find no evidence that this rate of mean reversion is related to market-wide measures of illiquidity, such as the VIX. Our results are thus also consistent with a lack of integration across capital markets.

 

 

 

 

(Host: Professor John Turner)

 

Thursday, May 28, 2015

 

Pareto-Improving Coordination Policies in Queueing Systems: Application to Flow Control in Emergency Medical Services

 

  

SPEAKER: Professor Masha Shunko

UNIVERSITY: Purdue University

TIME: 1:30 pm - 3:00 pm

 

ABSTRACT:

Coordination policies that balance server loads are well known for improving queueing-system performance. However, decentralized queueing systems allow each service agent to decline participation in the coordination mechanism. A sustainable policy for such a system must not only benefit the system, but also each individual agent. Particularly, agents are willing to participate in a coordination policy only if the performance of their individual queue is unhindered and if their revenues are not decreased. As a motivating example, we use the emergency-medicine setting: Emergency departments act as independent agents and overcrowding has a direct impact on the quality of service. In such a setting, departments are interested in seeing improvements in performance measures that address the expected number of patients (or expected census, a widely studied and applied metric in the emergency-medicine literature) and the risk of having a high census. We focus on reducing the expected census, the variance of census, the probability of having high census, and the conditional expected census in the overcrowded state and propose classes of coordination policies that provide improvement on all of these measures for all agents. In addition, agents who receive revenue based on the processed load are interested in preserving the long-term average load. Hence, our proposed policy classes guarantee that the expected arrival rate and hence, the expected revenue, is preserved for each agent in the system. We include a discussion of the implementation issues and propose an easily implemented policy.

 

 

 

(Host: Professor Sanjeev Dewan)

  

Wednesday, May 27, 2015


Talkographics: Using What Viewers Say Online to Calculate Audience Affinity Networks for Social TV-based Recommendations

 

SPEAKER: Dr. Shawndra Hill

UNIVERSITY: Wharton School of the University of Pennsylvania

TIME: 10:30 am - 12:00 pm

 

ABSTRACT:

Viewers of TV shows are increasingly taking to online sites like Facebook and Twitter to comment about the shows they watch as well as to contribute content about their daily lives. We present a novel recommendation system (RS) based on the user-generated content (UGC) contributed by TV viewers via the social networking site Twitter. In our approach, a TV show is represented by all of the tweets of its viewers who follow the show on Twitter. These tweets, in aggregate, enable us to reliably calculate the affinity between TV shows and to describe how and why certain shows are similar in terms of their audiences in a privacy friendly way. This paper’s two main contributions are: 1) a new methodology for collecting data from social media — including information about product networks (or how shows are connected through users on a social network), geographic location, and user-contributed text comments — which can be used to generate affinity networks and test them; and 2) a new privacy friendly UGC-based RS that relies on all publicly-available text contributed by viewers, as opposed to only pre-selected keywords extracted from the UGC associated with the shows, a specific ontology or taxonomy, which makes our approach more flexible and generalizable than those used in any prior research.

  

 

 

(Host: Professor Chong Huang)

 

Friday, May 22, 2015


Investor Behavior and Financial Innovation: Callable Bull/Bear Contracts

 

SPEAKER: Avanidhar Subrahmanyam

UNIVERSITY: University of California, Los Angeles, Anderson School of Management

TIME: 2:00 pm - 3:15 pm

 

ABSTRACT:

We examine the notion that financial innovations cater to investors’ behavioral biases. Specifically, we analyze the popularity of callable bull/bear contracts (CBBCs), which are options that can be called back when underlying prices reach a threshold. Investors treat CBBCs like lotteries in that they prefer CBBCs with low prices, high volatilities, and high skewness, and prefer trading them when underlying prices are near callback thresholds. During 2012, issuers gained (investors lost) 1.82 billion HKD (US$235 million) by trading CBBCs written on the Hang Seng Index. Our analysis highlights the importance of cumulative prospect theory in financial innovation.

  

 

 

(Host: Professor Alladi Venkatesh)

 

Friday, May 22, 2015


Looking in the Minds of Managers

 

SPEAKER: Professor Richard Bagozzi

UNIVERSITY: University of Michigan

TIME: 10:30 am - 12:00 pm

 

ABSTRACT:

After providing an introduction into neuroscience for persons new to the area, I will turn to summarizing the findings from three studies. Study 1 presents theory of mind processes in sales account managers and relates scores of managers on a new psychological scale to activation of relevant regions of the brain. Study 2 examines the role of mirror neuron regions related to empathy and relates activation in these regions of the brain to customer orientation mind-sets of sales account managers. Study 3 investigates the role of both theory of mind and empathetic processes in their relationship to Machiavellianism of sales account managers. In addition the associations between Machiavellianism and managerial control, performance, and organizational citizenship behaviors are explored in a field study. Functional Magnetic Resonance Imagery procedures are used for studying brain activation in all three studies. Time permitting, some research into genetic and hormonal aspects of managerial behavior will be discussed.

  

 

 

(Host: Professor Devin Shanthikumar)

 

Friday, May 15, 2015


Do Short-Sellers Profit From Mutual Funds? Evidence From Daily Trades

 

SPEAKER: Professor Charles M.C. Lee

UNIVERSITY: Stanford Graduate School of Business

TIME: 3:00 pm - 4:30 pm

 

ABSTRACT:

Using high resolution data, we show that short-sellers (SSs) systematically profit from mutual fund (MF) flows. At the daily level, SSs trade strongly in the opposite direction to MFs. This negative relation is associated with the expected component of MF flows (based on prior days’ trading), as well as the unexpected component (based on same-day flows). The ability of SS trades to predict stock returns is up to 3 times greater when MF flows are in the opposite direction. The resulting wealth transfer from MFs to SSs is most pronounced for high-MF-held, low-liquidity firms, and is much larger during periods of high retail sentiment. 

 

 

 

(Host: Professor Mireille Jacobson)

 

Tuesday, May 12, 2015

 

Hospitals as Insurers of Last Resort

 

SPEAKER: Professor Craig Garthwaite

UNIVERSITY: Northwestern University

TIME: 3:30 pm - 5:00 pm

 

ABSTRACT:

American hospitals are required to provide emergency medical care to the uninsured. We use previously confidential hospital financial data to study the resulting uncompensated care, medical care for which no payment is received. Using both panel-data methods and case studies from state-wide Medicaid disenrollments we find that the uncompensated care costs of hospitals increase in response to the size of the uninsured population.  Similarly, the closure of a nearby hospital increases the uncompensated care costs of remaining hospitals. Hospital profit margins show that non-profit hospitals are not able to simply pass along these increased costs to privately insured patients. For-profit hospitals are largely unaffected by these factors, suggesting that non-profit hospitals serve a unique role as part of the social insurance system.

 

 

 

 

(Host: Professor Chris Bauman)

 

Monday, May 11, 2015

 

Racial Inequality: How White Americans Talk About It, Why, and Why It Matters

 

SPEAKER: Professor Rosalind Chow

UNIVERSITY: Carnegie Mellon University

TIME: 10:00 am - 12:00 pm

 

ABSTRACT:

Although many White Americans are uncomfortable about discussing racial inequities, especially in interracial interactions, these discussions are sometimes unavoidable. This project explores the possibility that how Whites choose to describe racial inequity—as either White advantage or minority disadvantage—is a strategic behavior designed to manage the discomfort associated with discussing racial inequity. In four studies, we show that White Americans 1) tend to describe racial inequality in terms of minority disadvantage (and avoid the use of the term White advantage) and 2) believe that the term “minority disadvantage” will not only be more effective than “White advantage” at persuading other Whites that racial inequality is an important issue, but also make non-White partners feel more comfortable in an interaction. Implications for interracial interactions and intergroup relations will be discussed.

 

  

 

 (Host: Professor Libby Weber)

 

Friday, May 8, 2015

 

Paying Attention to Misconduct: Explaining Differential Reactions to Earnings Restatements After Sarbanes-Oxley

 

SPEAKER: Assistant Professor Jo-Ellen Pozner

UNIVERSITY: University of California, Berkeley 

TIME: 2:00pm - 3:30pm

 

ABSTRACT:

While we have much insight into the behavior of firms that comply – or want to appear to comply – with the law behave in the face of legislative reform, there is a gap in our understanding of how firms seen to break the law respond. In this paper, we ask how changes in corporate legislation impact the behavior of firms engaging in misconduct by studying the impact of the Sarbanes-Oxley Act of 2002 on publicly traded firms that restate earnings. We find that, after Sarbanes-Oxley’s passage, firms are much more likely to take visible and costly remedial action – in the form of firing their Chief Executive Officer – after restating earnings than they were before. We also find that Sarbanes-Oxley redirects media attention to the problem of restatement, and that this attention is itself associated with more costly remedial action. Finally, we find that media attention partially mediates the effects of the legislation on firm response, suggesting that it is specifically the redirection of attention, rather than the legislation itself, that induces the change in firm behavior. In a discontinuity analysis of micro-cap firms, some of which are exempt from Sarbanes-Oxley’s Section 404, we find that it is those firms that are exempt from the legislation that are more likely to change their CEOs when scrutinized by the media. 

 

 

 

(Host: Professor Chris Schwarz)

 

Friday, May 1, 2015

 

Playing Favorites: Conflicts of Interest in Mutual Fund Management

(Preliminary and Incomplete) Please do not quote without permission

 

SPEAKER: Professor Diane Del Guercio 

UNIVERSITY: University of Oregon

TIME: 2:00pm - 3:15pm

 

ABSTRACT:

We provide new evidence in the debate on the impact of side-by-side management in the mutual fund industry. Using a new dataset hand collected from SEC regulatory filings, we compare the performance of funds with managers who receive performance-based fees in pooled investment vehicles or separately managed accounts to funds without these side-by-side arrangements. In a comprehensive sample of actively managed equity mutual funds offered by the top 30 families from 2005 to 2011, we find that approximately 19% of managers fit the definition of a side-by-side mutual fund manager. Side-by-side funds underperform other peer funds by an economically and statistically significant 7.4 bps per month in Carhart alpha, or 88.8 bps per year. The negative impact of side-by-side management is stronger in single-manager funds than in team-managed funds. Further tests using a sample of managers who change their side-by-side status during the sample period confirm the negative impact of side-by-side management on mutual fund performance. Our evidence provides support for the conflicts of interest hypothesis, which suggests that the high-powered incentive fees in outside accounts (e.g., hedge funds) lead mutual fund managers to strategically shift returns from mutual funds to other accounts.

 

 

 

(Host: Professor Devin Shanthikumar)

 

Friday, May 1, 2015

 

Sometimes Less is More: Evidence from Financial Constraints Risk Fact Disclosures 

 

SPEAKER: Professor Haiwen Zhang

UNIVERSITY: Ohio State University

TIME: 3:00 pm - 4:30 pm

 

ABSTRACT:

We examine whether increased financial constraints risk factor disclosures during and after the financial crisis or in response to SEC comment letters reflect firms’ underlying financial constraints risk outcomes. We find that financial constraints risk factor disclosures are positively associated with ex-ante litigation risk and expected financial constraints levels before, during, and after the financial crisis. We also find that the association between disclosures and litigation risk is significantly greater during and after the financial crisis than that for the pre-crisis period. While we find that the financial constraints risk factor disclosures are positively associated with realized financial constraints outcomes for the pre-crisis period, we find no significant association between these disclosures and realized financial constraints outcomes during or after the financial crisis and this association reduces significantly from the pre-crisis to post-crisis period. Furthermore, we document that, while firms increase their financial constraints risk factor disclosures after receiving SEC comment letters, these disclosures are less reflective of realized financial constraints outcomes. Overall, our findings that increased financial constraints risk factor disclosures following the financial crisis and SEC comment letters are less reflective of the underlying economic risk suggest that sometimes less is more.

 

 

 

(Host: Professor Libby Weber)

 

Friday, May 1, 2015

 

To the Extreme: CEO Political Orientation and Extreme Corporate Career Outcomes

 

SPEAKER: Professor Scott D. Graffin

UNIVERSITY: University of Georgia

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT:

We examine the implications of a CEO’s political orientation on organizational and personal career outcomes. Recent research suggests an executive’s political orientation is an ex ante measure of his/her propensity to take risk, with Republican leaning (i.e., conservative) CEOs having relatively lower risk tolerance than Democratic leaning CEOs. We extend this research by arguing that firms led by Democratic leaning CEOs will experience more extreme performance outcomes, due to their greater tolerance for risk, compared to firms run by Republican leaning CEOs. We also argue that Democratic leaning CEOs will experience more extreme career outcomes as a result of their increased likelihood to engage in risky behaviors. Consistent with these predictions, we find that firms run by Democratic leaning CEOs are more likely to have extreme stock returns than firms run by Republican leaning CEOs. Additionally, we find that Democratic leaning CEOs are more likely to win CEO-of-the-year awards, but are also more likely to be involuntarily dismissed. Finally, we find that the increased likelihood of dismissal for Democratic leaning CEOs is weakened if the CEO recently won an award. Overall, we contribute to a growing stream of research that investigates the organizational and individual consequences of political orientation.

 

 

 

(Host: Professor Devin Shanthikumar)

 

Friday, April 24, 2015

 

Seeking Control in the Absence of Formal Control Systems

 

SPEAKER: Dr. Dennis Campbell

UNIVERSITY: Harvard Business School

TIME: 3:00 pm - 4:30 pm

 

ABSTRACT:

In this talk, I will discuss some new work which draws on field data and economic models of organizational culture to examine rates of cultural diffusion and their determinants in an organization following a significant reduction in its reliance on formal management control systems. Using data on discretionary loan pricing decisions made by employees in this organization, we measure cultural diffusion based on the evolution of empirically observed decision-making norms over time. Consistent with economic models of culture as shared preferences rather than shared beliefs, we find that cultural diffusion rates are much more strongly driven by selection of new employees rather than acculturation of existing employees. Cultural diffusion via the latter mechanism is slowed considerably due to "control seeking" behavior whereby existing employees default to decision-making norms of hierarchical superiors. The work also documents a leader-follower dynamic by which new employees make decisions independent of those of hierarchical superiors, developing new decision-making norms in the process which are later followed by existing employees. Finally, consistent with economic models of culture as relational contracts, we find that cultural diffusion rates are fragile in that they are sensitive to proxies for the temptation of hierarchical superiors to renege on the organization's implicit promise to tolerate high levels of discretionary decision-making. Collectively, the results provide new empirical insights into the dynamic relationship between management control systems and organizational culture.  

 

 

 

(Host: Professor Chong Huang)

 

Friday, April 24, 2015

 

Selling Assets: When is the Whole Worth More Than the Sum of Its Parts, Joint with Raj Singh (Minnesota)

 

SPEAKER: Robert Marquez

UNIVERSITY: University of California, Davis

TIME: 2:00 pm - 3:15 pm

 

ABSTRACT:

When is it better to sell assets separately versus pooling them together? We study this issue in a setting where the number of potential buyers for an asset is endogenous and is a function not just of the costs associated with due diligence but also of the composition of the set of other possible buyers. We show that if buyers anticipate that there may be another buyer who in expectation has a higher value for the target, they will be less likely to enter since they anticipate being less likely to win, and having to pay a higher price when they do win. This reduces competition and lowers revenue for the seller of the asset. This reduction in competition, however, is different depending on how the assets are sold and is attenuated when assets are sold together relative to when they are sold separately. We characterize when this competitive effect leads the seller to prefer to sell the assets together rather than individually.

 

 

 

(Host: Professor Luyi Gui)

 

Friday, April 24, 2015


Retail Sales Advisory and Compensation in a Distribution Channel

 

SPEAKER: Yunchuan Liu

UNIVERISTY: University of Illinois at Urbana-Champaign

TIME: 10:30 am - 11:30 am

 

ABSTRACT:

Big retailers that carry a large assortment of differentiated manufacturer products rely on sales associates to advise consumers, or match consumers with products that suit their particular needs. This study examines a big retailer's incentive to motivate or suppress its sales representative's advising effort in a channel context when the retailer maximizes its profit in interacting with fit-uncertain consumers, the sales representative, and upstream manufacturers competing to sell. We also examine a manufacturer's incentive to offer SPIFF (Sales Person Incentive Funding Formula) payments directly to the retailer's sales representative to award sales of its own product, as well as the retailer's incentive to allow its sales representative to accept such payments. Our analysis shows that better matching between consumers and products may hurt the retailer profit, in which case the retailer cuts its own sales commissions and blocks manufacturer SPIFF programs so as to suppress retail sales advisory. The retailer has incentive to offer sales commissions or allow manufacturer SPIFFs to motivate its sales associates better advising consumers only when the fit probability of products is sufficiently low and the market contains a sufficiently large size of fit-uncertain consumers. Our analysis suggests that the increasingly popular practice among manufacturers to bypass retailers in rewarding retailers' sales representatives enhances consumer welfare; and this insight has important implications for public policy makers who generally hold a negative attitude towards manufacturer kickbacks. Interestingly, our study reveals that how a big retailer manages its interactions with upstream manufacturers critically depends on the fit probability of products, or the matching probability between consumers and products in the market. While a low matching probability forces the retailer to seek coordination from the manufacturers in motivating retail sales advisory, a high matching probability incentivizes the retailer to fight with the manufacturers for a more favorable channel status. Our theoretical insights provide explanations for many observed sales compensation practices at big retailers such as Sears, JC Penney, and Lowes.

 

 

 

(Host: Professor Libby Weber)

 

Thursday, April 23, 2015


"The Theory of Entrepreneuring"

 

SPEAKER: Dr. Jackson A. Nickerson

UNIVERISTY: Washington University in St. Louis

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT:

In this paper we propose a theory of entrepreneuring—the design, enactment, and interpretation of search strategies to discover and refine an entrepreneur’s model or theory for generating entrepreneurial rents—that involves ex ante contracting and ex post adaptation between an entrepreneur and a financier.  Our theory is based on three component parts.  First, we introduce a two-dimensional problem context and problem uncertainty space, showing that experimental costs vary across the problem landscape, and derive implications for designing, running, and governing experiments.  Second, we introduce homo entrepreneurus, a model of man that includes (1) ego preservation as a constituent part of self-interest seeking with guile and (2) associative thinking as a constituent part of bounded rationality, and consider the implications for designing, running, and governing experiments. Third, we identify six alternative discrete governance modes between entrepreneur and financier that differ in their costs and competencies for facilitating search and mitigating bias.  These governance structures vary in their incentives, administrative controls, and conflict resolution, shape entrepreneuring decision-making and provide, to vary degrees, credible commitment to efficaciously refine, pivot, or abandon theories or models. Our primary hypothesis is that these six governance alternatives are discriminatingly aligned with specific regions of problem complexity and context in an economizing way to increase the ex post likelihood of creating and capturing value.

 

 

 

(Host: Professor Devin Shanthikumar)

 

Wednesday, April 22, 2015


Run EDGAR Run: SEC Dissemination in a High-Frequency World

 

SPEAKER: Sarah Zechman

UNIVERSITY: University of Chicago, Booth School of Business

TIME: 1:30 pm - 3:00 pm

 

ABSTRACT:

We detail the process through which the SEC disseminates insider trading filings. In the majority of cases, filings are available to private subscribers before they are posted to the SEC website. For these filings, prices, volumes, and spreads respond to the news beginning around 30 seconds before public posting. Of the 2.92% return associated with insider purchases, 0.58% accrues before the news is posted to the SEC site, and 0.42% accrues before EDGAR accepts the filing. These results raise questions about whether the EDGAR dissemination process is a level playing field for all investors.

 

 

 

 

(Host: Devin Shanthikumar)

 

Friday, April 17, 2015


"The behavior of aggregate corporate investment"

 

SPEAKER: Dr. S P Kothari

UNIVERISTY: MIT

TIME: 3:00 pm - 4:30 pm

 

ABSTRACT:

We study the behavior of aggregate corporate investment from 1952–2010. Investment grows rapidly following high profits and stock returns but, contrary to standard predictions, is largely unrelated to recent changes in market volatility, interest rates, or the default spread on corporate bonds. At the same time, high investment predicts negative profit growth going forward and is associated with low stock returns when investment data are publicly released, suggesting that a jump in investment coincides with bad news. Our analysis also shows that the investment decline following the financial crisis of 2008 was not unusual given the drop in GDP and profits at the end of 2008.

 

 

 

(Host: John Turner)

 

Monday, April 13, 2015


Collaboration and Multi-Tasking in Networks

 

SPEAKER: Dr. Jan Van Mieghem

UNIVERISTY: Northwestern University

TIME: 11:00 am - 1:30 pm

 

ABSTRACT:

I will discuss my recent research stream that focuses on a specific notion of how people collaborate and its implications on throughput, capacity and service.  Itai Gurvich and I consider simultaneous collaboration by which we mean that multiple resources need to be present simultaneously to execute a task.  The second characteristic of the environment we study is multi-tasking: the resources also execute other tasks.  And the third characteristic concerns indivisibility: in contrast to computers that can share their bandwidth to multiple data streams, human resources (as well as some capital assets like vessels in pharmaceuticals) cannot split themselves and can only perform one task at any point in time.

 

 

 

(Host: Alladi Venkatesh)

 

Friday, April 10, 2015


Sensory Identity: The Impact of Olfaction on Consumption

 

SPEAKER: Samantha Cross, Associate Professor Marketing

UNIVERISTY: Iowa State University

TIME: 11:00 am - 12:30 pm

 

ABSTRACT:

Samantha N. N. Cross, Meng-Hsien (Jenny) Lin and Terry L. Childers

 

The authors broaden the scope of consumer identity by introducing a sensory twist, olfaction (sense of smell) and its impact on consumption and identity. The concepts of olfactory sensitivity and olfactory sensory identity are examined through a mixed-method embedded approach, using a combination of depth interviews and smell tests. The authors seek to understand how sensory abilities shape and form consumers’ perceptions of self, further influencing their consumption behaviors and consumer well-being. The authors argue that depending on an individual’s level of olfactory sensitivity, consumer sensory identity can be every bit as salient, compelling and alienating as other facets of consumer identity.

 

 

 

 

(Host: Luyi Gui) 

 

Friday, April 3, 2015

 

Mitigate Supplier Responsibility Risk in Emerging Economies: An Ethical Sourcing Framework

Sponsored by: The John S. & Marilyn Long U.S. - China Institute for Business and Law and the Operations and Decision Technologies Group

 

SPEAKER: Dr. Li Chen

UNIVERSITY: Duke University

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT:

Sourcing from emerging economies may yield direct cost savings, but companies often face greater risk of supplier responsibility problems due to many factors, with lax regulatory enforcement in these regions being one of them.  Intuitively, to mitigate such risks, companies can design incentive schemes in sourcing contracts and invest in screening mechanisms for supplier sourcing. However, the relative effectiveness of these actions is often not known. To address this problem, we first develop a model that captures the supplier's rational decision making. Under this model, the supplier responsibility risk is endogenized and can be influenced by various factors, including the supplier's intrinsic ethical level. We then propose to use a delayed payment contract to mitigate supplier responsibility risk. When the supplier's intrinsic ethical level is unobservable to the buyer, we study the optimal screening mechanism based on the delayed payment contract. Surprisingly, we find that, when the buyer anticipates a high cost impact as a result of supplier responsibility problems, the optimal screening mechanism collapses to a random selection.  To remedy this problem, we further consider screening mechanisms involving voluntary or mandatory supplier certification.  We show that both certification mechanisms can help mitigate supplier responsibility risk in certain cases. Specifically, a properly designed mandatory certification can help the buyer to achieve the first-best performance when the cost impact from supplier responsibility problems is high.

  

 

 

(Host: Devin Shanthikumar)


Friday, April 3, 2015

 

Compensation Contract Design to Mitigate Adverse Selection: Inducement Grants and New CEO Announcements

 

SPEAKER: Brian Cadman

UNIVERSITY: University of Utah

TIME: 3:00 pm - 4:30 pm


ABSTRACT:

Selecting and identifying a new CEO that matches the needs of a firm is a difficult task because of asymmetric information. We examine how firms design compensation contracts to mitigate adverse selection problems related to new CEO appointments. We focus on inducement grants, initial compensation schemes that vary in the degree to which their values are sensitive to new CEO announcement returns.

 

 

 

(Host: Mireille Jacobson) 

 

Tuesday. March 31, 2015

 

Uncovering Waste in U.S. Healthcare 

 

SPEAKER: Joe Doyle

UNIVERSITY: Massachusetts Institute of Technology

TIME: 3:30 pm - 5:00 pm

 

ABSTRACT:

There is widespread agreement that the US healthcare system wastes as much as 5% of GDP, yet little consensus on what care is actually unproductive. This partly arises because of the endogeneity of patient choice of treatment location. This paper uses the effective random assignment of patients to ambulance companies to generate comparisons across similar pa- tients treated at different hospitals. We find that assignment to hospitals whose patients receive large amounts of care over the three months following a health emergency do not have meaningfully better survival outcomes compared to hospitals whose patients receive less. Outcomes are related to different types of treatment intensity, however: patients as- signed to hospitals with high levels of inpatient spending are more likely to survive to one year, while those assigned to hospitals with high levels of outpatient spending are less likely to do so. This adverse effect of outpatient spending is predominately driven by spending at skilled nursing facilities (SNF) following hospitalization. These results offer a new type of quality measure for hospitals based on utilization of SNFs. We find that patients quasi- randomized to hospitals with high rates of SNF discharge have poorer outcomes, as well as higher downstream spending once conditioning on initial hospital spending.

 

 

 

(Host: Chong Huang) 

 

Friday, March 20, 2015

 

The In-State Equity Bias of State Pension Plans 

 

SPEAKER: Scott Weisbenner

UNIVERSITY: University of Ilinois at Urbana-Champaign

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT:

We examine the interplay between two important decisions that impact environmental performance in a production setting: inspections performed by a regulator and noncompliance disclosure by a production firm. To preempt the penalty that will be levied once a compliance violation is discovered in an inspection, the firm dynamically decides whether it should disclose a random occurrence of noncompliance. Anticipating this, the regulator determines inspection frequency and penalty amounts to minimize environmental and social costs, performing either random inspections or periodic inspections.We study this problem by developing a novel analytical framework that combines features from reliability theory and law enforcement economics. We find that, contrary to common belief, surprising the firm with random inspections is not always preferred to inspecting the firm periodically according to a set schedule. We also find that the firm’s opportunistic disclosure timing behavior may lead to a partial disclosure equilibrium in which the substitutable relationship between inspection intensity and penalty is reversed; a threat of increased penalty is accompanied by more frequent inspections.

 

 

 

(Host: Libby Weber)

 

Thursday, March 19, 2015


A Resource-Based View of Openness

 

SPEAKER: Joel West

UNIVERSITY: Keck Graduate Institute

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT: 

Given that the resource-based view (RBV) holds that firms should control valuable, rare, and inimitable resources, strategic openness—voluntarily forfeiting control over resources—seems like a direct contradiction. Linking the RBV and its advances on customer-centric definitions of value, we show how openness represents a strategic trade-off: firms decrease rarity and inimitably of resources as they hope to increase customer value and improve their ability to organize for value capture. We show how openness can shape the dynamics of entire industries, identify when firms are most likely to employ it, and define boundary conditions of its potential impacts. In doing so, we extend the RBV on endogenously changing the nature of competition, the origin of value, and the role of openness in firm strategy.

 

 

 

 (Host: Jone Pearce)

 

Wednesday, March 18, 2015


The Perception of Status: How Third Party Observers Infer Status From Network Position

 

SPEAKER: Sarah Otner

UNIVERSITY: University of Oxford

TIME: 3:30 pm - 5:00 pm

 

ABSTRACT: 

We explore whether, how, and when TPOs’ perceptions of the social relationships of other individuals influence their (TPOs’) identification of other’s social status. We contend that an attributional process informs these inferences. In this context, the TPO attributes an event - the social relationship between two persons – either to its cause, or to the respect and admiration that one member of a dyad has for another. We propose that a TPO may attempt to construct a causal explanation for the presence and direction of an observed tie between ego and alter. 

By conceptualizing the information-processing mechanism underlying the TPO’s inference of status as an attributional process, our theoretical framework can account for differences in the accuracy of a TPO’s perception of ego’s ties, which may help to explain variance in how a TPO determines the status of Ego. We explore these questions in a series of laboratory experiments.

 

 

 

(Host: Chong Huang) 

 

Friday, March 13, 2015

 

Adverse Selection and Intermediation Chains

 

SPEAKER: Vincent Glode

UNIVERSITY: University of Pennsylvania 

TIME: 200 pm - 3:30 pm

 

ABSTRACT:

We propose a parsimonious model of over-the-counter trading with asymmetric information to rationalize the existence of intermediation chains that stand between buyers and sellers of assets.Trading an asset through several heterogeneously informed intermediaries can preserve the efficiency of trade by reallocating an information asymmetry over many sequential transactions.Such an intermediation chain ensures that the adverse selection problems counterparties face in each transaction are small enough to allow for socially efficient trading strategies by all parties involved.Our model makes novel predictions about network formation and rent extraction when adverse selection problems impede the efficiency of trade.

 

 

 

(Host: Chong Huang)

 

Friday, February 27, 2015

 

Evolutionary Foundations of Economic Behavior, Bounded Rationality, and Intelligence

 

SPEAKER: Andrew Lo

UNIVERSITY: Massachusetts Institute of Technology (MIT)

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT:

In a simple evolutionary model with one-period agents making binary choices that determine their reproductive success, we show that natural selection is capable of generating several behaviors that have been observed in organisms ranging from ants to human subjects, including risk-sensitive foraging, risk aversion, loss aversion, probability matching, randomization, and diversification. Given an initial population of individuals, each assigned a purely arbitrary behavior with respect to a binary choice problem, and assuming that offspring behave identically to their parents, only those behaviors linked to reproductive success will survive, and less reproductively successful behaviors will disappear at exponential rates. When the uncertainty in reproductive success is systematic, natural selection yields behaviors that may be individually sub-optimal but are optimal from the population perspective; when reproductive uncertainty is idiosyncratic, the individual and population perspectives coincide. The simplicity and generality of our model imply that these derived behaviors are primitive and universal within and across species.  This framework also suggests a natural definition of intelligence---any behavior positively correlated with reproductive success---and links physiological and environmental constraints to the degree of intelligence that emerges, i.e., bounded rationality.  

 

 

(Host: Shuya Yin)

 

Friday, January 30, 2015

 

Price Matching Negotiation in Competitive Channels

 

SPEAKER: Gangshu (George) Cai

UNIVERSITY: Leavey School of Business, Santa Clara University

TIME:10:00 a.m. - 11:30 a.m.

 

ABSTRACT:

In price matching negotiation, a channel matches the resulting wholesale price bargained earlier by the other channel. We investigate this negotiation mechanism and compare it with two benchmarks, simultaneous negotiation and sequential negotiation. Through a common-seller two-buyer channel model, we find that in price matching the seller prefers to negotiate with the less powerful buyer, whereas in sequential negotiation the seller prefers to negotiate with more powerful buyer first. Firms have different preferences between price matching negotiation and the benchmarks, and their discrepancy is irreconcilable. With side payment, however, price matching negotiation can emerge as a mutually beneficial choice for all firms as compared to simultaneous negotiation and sequential negotiation. We also explore the impact of asymmetric market size and coownership, compare Bertrand competition to Cournot competition, and study seller collusion in a bilateral channel model.

 

 

(Host: Robin Keller)

 

Friday, January 23, 2015


Self-Sustaining Supply Chains

 

SPEAKER: Jay Simon

UNIVERSITY: Defense Resources Management Institute, The Naval Postgraduate School

TIME: 10:30 am - 12:00 pm

 

ABSTRACT:

Developing accurate estimates of logistics costs and resource requirements has been a major challenge in recent international operations.  The primary difficulty is that the supply chains are often “self-sustaining,” i.e. the supply chains themselves consume resources that are not locally available.  In this stream of work, we develop a model to estimate fuel requirements for a self-sustaining supply chain (SSSC), we analyze the relationship between SSSCs and complexity of humanitarian aid and disaster relief operations, and we expand the initial model to allow for self-sustainment with respect to multiple resources.

 

 

(Host: Luyi Gui)

 

Thursday, November 13, 2014


Acquisition vs Monetization in the Design of Digital Goods

 

SPEAKER: Christopher T. Ryan

UNIVERSITY: Booth School of Business, University of Chicago

TIME: 12:00 pm - 1:30 pm

 

ABSTRACT:

Finding ways to both attract new users and extract revenue from existing users of digital goods and services is an important consideration. A key determinant of the effectiveness of both attraction and extraction is the design of the good itself. For instance, a simple and easy-to-learn design attracts new users to adopt the good. On the other hand, such designs may leave little room for monetizing committed users. We propose a dynamic optimal control model that examines the tradeoff between acquisition and monetization in design. Our analysis provides insight into how the population of users and the accessibility of the design evolve over time to balance this tradeoff and how this evolution depends the nature of the good. We focus particular attention on whether and how long a design should focus on acquisition, an important decision for many designers in digital markets. In particular, we characterize when a designer optimally includes an acquisition period, provide analytical guidelines on when to time the start of monetizing, and explore the sensitivity of this timing to exogenous factors, such as the social nature of the good and the competitive environment. 

 

 

(Host: Shuya Yin)

 

Friday, November 7, 2014


Inducing Environmental Disclosures: A Dynamic Mechanism Design Approach

 

SPEAKER: Shouqiang (Qiang) Wang

UNIVERSITY: College of Business and Behavioral Science, Clemenson University

TIME: 10:00 am - 11:30 am

 

ABSTRACT: 

This paper studies the design of voluntary disclosure regulations for a profit-maximizing firm that faces a stochastic environmental noncompliance such as hazardous substances leaking to the environment. Whether such a hazard has occurred is known only to the firm, and the regulator decides (possibly randomly) at any given time instant whether to inspect the firm. If the regulator detects the noncompliance, it inflicts a penalty on the firm. Because inspections are costly and may not be perfectly accurate, the regulator also offers a reward (or subsidy) for voluntarily reporting the hazard. The regulator's objective is to dynamically determine the subsidy and inspection policy that maximizes the long-run expected discounted societal payoff, which takes into account economic outputs as well as environmental and regulatory costs. We model this problem as a dynamic adverse selection problem with costly state verification in continuous time, and we fully characterize the optimal policy in closed form. Our analysis reveals the key role of inspection accuracy in designing voluntary disclosure regulations. Specifically, when the inspection accuracy is higher than a fixed threshold, the optimal regulation policy follows a cyclic structure alternating between subsidy and random inspection periods. During a subsidy period, the subsidy level for self-disclosure decreases over time. When the subsidy level reaches zero, an inspection occurs after an exponentially distributed random time interval. If the inspection does not reveal any hazard, the subsidy level is reset to a positive value, which restarts the cycle. By contrast, when inspection accuracy is lower than the threshold, the regulator inspects the firm with certainty at fixed time intervals. Our results further reveal new insights into designing voluntary disclosure regulations. In particular, the optimal inspection frequency increases with the non-disclosure penalty when inspection accuracy is low.

 

  

(Host: Luyi Gui)

 

Friday, October 24, 2014


Supplier Evasion of a Buyer's Audit: Implications for Motivating Supplier Social and Environmental Responsibility

Sponsored by: The John S. & Marilyn Long U.S. - China Institute for Business and Law and the Operations and Decision Technologies Group

 

SPEAKER: Terry Taylor

UNIVERSITY: University of California, Berkeley

TIME: 2:00 pm - 3:30 pm

 

ABSTRACT: 

Recently, some prominent buyers’ brands have been damaged by a supplier’ deadly factory fire or release of toxic chemicals. This paper provides guidance to buyers as to how to motivate their suppliers to exert more care to prevent such harm to workers and the environment. Obvious approaches (increasing auditing, publicizing negative audit reports, providing a loan to the supplier) can be counterproductive. Less obvious approaches (squeezing the supplier's margin by reducing the price paid to the supplier or increasing wages for workers, pre-commitment to a low level of auditing) might better motivate supplier responsibility. Even if the buyer ensures that the supplier's facility is safe, e.g., through direct investment in the facility, the supplier may outsource some production of the buyer's order to unauthorized subcontractors, exposing the buyer to risk of brand damage. The results in the paper also apply to mitigation of unauthorized subcontracting. (Joint with Erica Plambeck.)

 

  

April 18, 2014

Mark Grinblatt, UCLA 

More details later.

  

April 11, 2014

Diego Garcia, UNC

More details later.

 

(Host: Siew Hong Teoh)

 

Monday, August 11, 2014


Short Selling Risk

SPEAKER: Joseph Engelberg

UNIVERSITY: University of California, San Diego

TIME: 12:00 pm - 1:15 pm

 

ABSTRACT:

Short sellers face a number of unique risks, such as the risk that stock loans become expensive and the risk that stock loans are recalled. We show that these short selling risks affect prices among the cross-section of stocks. Stocks with more short selling risk have lower returns, less price efficiency, and less short selling. Overall, short selling risk adds to the limits of arbitrage and may help explain the low short-interest puzzle (Lamont and Stein (2004)) and the short interest return anomaly (Boehmer, Huszar and Jordan (2009)). 

 

 

 (Host: Siew Hong Teoh)

 

Monday, August, 11, 2014


The Geography of Financial Misconduct

SPEAKER: Christopher Parsons

UNIVERSITY:  University of California, San Diego

TIME: 12:00 pm - 1:15 pm

 

ABSTRACT:

We find that a frim's tendency to engage in financial misconduct increases with the misconduct rates of neighboring firms. This appears to be caused by peer effects, rather than exogenous shocks like regional variation in enforcement. Effects are stronger among firms of comparable size, and among CEOs of similar age. Moreover, local waves of financial misconduct correspond with local waves of non-financial corruption, such as political fraud.