Economics Insights @ CBS

We investigate a prominent allegation in congressional hearings that Moody's loosened its rating standards to chase revenue after it went public in 2000. Consistent with this allegation, Moody's ratings for both corporate bonds and structured finance products are significantly more favorable to issuers, relative to S&P's, after Moody's IPO. Moreover, Moody's ratings are more favorable for clients subject to greater conflict of interest.

Many factors introduce the prospect of changes for the demand environment that a firm faces, with the specifics of such changes not necessarily known in advance. If and when realized, such changes affect the delicate balance between demand and supply and thus should be anticipated to the extent possible. We study the dynamic pricing problem of a retailer facing the prospect of a change in the demand function during a finite selling season with no inventory replenishment opportunity.

Despite the importance of self-awareness for managerial success, many organizational members hold overly optimistic views of their expertise and performance — a phenomenon particularly prevalent among those least skilled in a given domain. We examined whether this same pattern extends to appraisals of emotional intelligence (EI), a critical managerial competency. We also examined why this overoptimism tends to survive explicit feedback about performance. Across 3 studies involving professional students, we found that the least skilled had limited insight into deficits in their performance.

The door is the boundary between the foreign and domestic worlds in the case of an ordinary dwelling, between the profane and sacred worlds in the case of a temple. Therefore to cross the threshold is to unite oneself with a new world (van Gennep 1960: 20).

This study shows how experiential product attributes that are part of the design of new products can create compelling consumer experiences. Following processing-fluency theory, when consumers attend to experiential attributes (sensory or affective), they should process them fluently (i.e., spontaneously and with little effort); however, consumers should process functional attributes always deliberately, irrespective of whether or not they attend to them.