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Faculty & Research

Distinguished 2015 Commencement Speaker

 

Paul Merage

 

MIG®

 

Chairman and CEO
 

June 15, 2015

 

Learn more

 

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. 

 

 

 

 

(Host: 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: 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: 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: 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.