Faculty AI Research

Both managerial ownership and performance are endogenously determined by exogenous (and only partly observed) changes in the firm's contracting environment. We extend the cross-sectional results of Demsetz and Lehn (1985), (Journal of Political Economy, 93, 1155?1177) and use panel data to show that managerial ownership is explained by key variables in the contracting environment in ways consistent with the predictions of principal-agent models. A large fraction of the cross-sectional variation in managerial ownership is explained by unobserved firm heterogeneity.

We analyze forms of synergy between emic and etic approaches to research on culture and cognition. Drawing on the justice judgment literature, we describe dynamics through which the two approaches stimulate each other's progress. Moreover, we delineate ways in which integrative emic/etic frameworks overcome limitations of narrower frameworks in modeling culture and cognition. Finally, we identify advantages of integrative frameworks in guiding responses to the diverse justice sensitivities in international organizations.

This paper lays out alternative equity valuation models that involve forecasting for finite periods and shows how they are related to each other. It contrasts dividend discounting models, discounted cash flow models, and "residual income" models based on accrual accounting. It shows that some models that are apparently different yield the same valuation. It gives the general form of the terminal value calculation in these models and shows how this calculation serves to correct errors in the model.

This paper concerns the modeling of low inventory lines. Currently, most models assume that processing times are independent. We consider the differences in behavior of workers in low- and high-inventory production lines. Using a laboratory experiment we show that workers speed up whent hey are the cause of idle time on the line. This means that processing time distributions are not independent of the size of the buffer, of the processing speed of co-workers, or of the amount of inventory in the system.

In this paper we develop policies for scheduling dynamically arriving jobs to a broad class of parallel-processing queueing systems. We show that in heavy traffic the policies asymptotically minimize a measure of the expected system backlog, which we call system work. Our results yield succinct, closed-form expressions for optimal system work in heavy traffic.

We study the M_t/G/∞ queue where customers arrive according to a sinusoidal function λt = λ + A sin(2 π t/T) and the service rate is μ. We show that the expected number of customers in the system during peak congestion can be closely approximated by (λ + A)/ μ for service distributions with coefficient of variation between 0 and 1.

Generalized knowledge comes from cumulating results across studies, a process known as meta-analysis. Efficiently increasing generalized knowledge in a defined area-estimates of price or advertising, for example-is one important goal for research. Because (1) most meta-analyses are based on highly inefficient and unbalanced natural experiments or designs and (2) additional studies are costly, carefully selecting the next study is important.

Recent research on business investment decisions suggests that real investment in plant and equipment is quite sensitive to changes in the user cost of capital, pointing to the possibility that long-run changes in tax policy may have a significant impact on an economy's capital stock. Indeed, many countries have at times adopted investment tax incentives to stimulate investment. The prevalence of investment incentives suggests that local policy-makers believe these are effective in increasing investment at a reasonable cost in terms of lost revenue.

This paper describes novel market-based technologies for systematic, quantifiable and predictable protection of information systems against attacks. MarketNet establishes a financial market to regulate and protect access resource access and to account for their use. A domain offers access to its resources to cIients who can pay with its currency. It controls its exposure to attacks by pricing critical resources high and by limiting the currency available to potential attackers.

The fact that people frequently cooperate in the single-trial Prisoner's Dilemma (PD) game indicates that their decision making in conflicts is not always guided by game-theoretic analyses of expected outcomes. Whereas most theorists have accounted for cooperation in terms of an ethically rooted concern for matching another's “good faith” cooperation (Hofstadter, 1985), others have argued that cooperation reflects several distinct social norms or heuristics (Elster, 1989).

We show how a simple normal approximation to Erlang's delay formula can be used to analyze capacity and staffing problems in service systems that can be modeled as M/M/s queues.

The increased complexity of modern manufacturing has led to uncertainties in production processes. Factors such as unplanned machine maintenance, tool unavailability, and complex process adjustments make it difficult to maintain a predictable level of output. To be effective, an appropriate production model must incorporate these uncertainties into the representation of the production process. This paper considers a one-time production of an application-specific product which must follow a fixed routing through the manufacturing system.

It has been suggested that evaluations may be based on a "How-do-I-feel-about-it?" heuristic, which involves holding a representation of the target in mind and inspect feelings that this representation may elicit. Previous studies have shown that reliance on such feelings depends on whether they are believed to be representative of the target. This paper argues that it also depends on whether feelings toward the target are regarded as relevant.

This study investigates factors influencing causal attributions in managerial decision making. Three categories of factors are identified: (i) prior beliefs (ii) background frequencies, and (iii) covariation cues. The impact of factors in each of the above categories on causal attribution are studied in a marketing decision making context. Subjects demonstrated a bias toward assigning causality to variables that occurred infrequently or were controllable. Also, subjects were particularly influenced by the joint-occurrences of cause and effect variables.

The authors discuss the long-run future of decision support systems in marketing. They argue that a growing proportion of marketing decisions can not only be supported but may also be automated. From a standpoint of both efficiency (e.g., management productivity) and effectiveness (e.g., resource allocation decisions), such automation is highly desirable. The authors describe how model-based automated decision-making is likely to penetrate various marketing decision-making environments and how such models can incorporate competitive dynamics.

Why has the service factory model failed to live up to its original promise? To answer this question, we start with a basic concept: service is doing the work of your customer. As a result, it requires a high level of contact, communication and coordination with your customers. To deliver truly excellent service, therefore, requires a level of customer intimacy. That is, a service provider needs to know individual customers being served in order to deliver service that, in addition to being efficient, is also personal and effective in fulfilling their total service requirements.

We examine the effects of intergenerational transfers on saving behavior by analyzing transfers targeted to first-time home purchases. Transfer recipients have a shorter time to save for a down payment of 9-20%. For each dollar of transfer received, total savings falls by 29-40 cents and the down payment rises by 61-71 cents. Transfer recipients increase the value of the home purchased, but by an amount that is much lower than possible if the transfer were fully leveraged.

We examine some mathematical aspects of learning unknown mappings with the mixture of experts model (MEM). Specifically, we observe that the MEM is at least as powerful as a class of neural networks, in a sense that will be made precise. Upper bounds on the approximation error are established for a wide class of target functions. The general theorem states that ||f-f_n||_p⩽c/n^r d/ for f∈W_p^r(L) (a Sobolev class over [-1,1]^d), and f_n belongs to an n-dimensional manifold of normalized ridge functions.

Two and three-dimensional variants of Hotelling's (1929) model of differentiated products are analyzed. In the setup, consumers can place different importances on each product attribute; these are measured by weights on the disutility of distance in each dimension. Two firms play a two-stage game; they choose locations in stage 1 and prices in stage 2. Subgame-perfect equilibria are sought. It is found that all such equilibria have maximal differentiation in one dimension only; in all other dimensions they have minimum differentiation.

To improve the efficiency of product distribution for a centralized bakery, I first performed each person's tasks and discovered that constructing optimal minimum-distance routes would not significantly reduce costs but replacing the physical validation of new routes with a manual mathematical computation or simulation would. The trick was getting management to trust the simulation enough to use it.

This note gives a simple proof that in a (r, q) system the average outstanding backorders andthe average stockouts per unit time are jointly convex in the two control variables q and r.

Examines the correlation between investments and proxies for changes in net worth or internal funds and the importance of this correlation for firms likely to face information related capital-market imperfections. Developments and challenges in empirical research; Analytical underpinnings of models of capital market imperfections; Model's application to investment activities.

A major problem in forecasting is estimating the time of some future event. Traditionally, forecasts are designed to minimize an error cost function that is evaluated once, possibly when the event occurs and forecast accuracy can be determined. However, in many applications forecast error costs accumulate over time, and the forecasts themselves may be updated with information that is collected as the expected time of the event approaches. This paper examines one such application, in which flow control managers in the U.S.

The paper develops a simple model of corporate ownership structure in which costs and benefits of ownership concentration are analyzed. The model compares the liquidity benefits obtained through dispersed corporate ownership with the benefits from efficient management control achieved by sonic degree of ownership concentration. The paper reexamines the free-rider problem in corporate control in the presence of liquidity trading, derives predictions for the trade and pricing of blocks, and provides criteria for the optimal choice of ownership structure.