Economics Insights @ CBS

Negative social feedback is often a source of distress. However, self-verification theory provides the counterintuitive explanation that negative feedback leads to less distress when it is consistent with chronic self-views. Drawing from this work, the present study examined the impact of receiving self-verifying feedback on outcomes largely neglected in prior research: implicit responses (i.e., physiological reactivity, facial expressions) that are difficult to consciously regulate and downstream behavioral outcomes.

Motivated by recent empirical work, this paper formalizes a theory of competitive savings — an arms race in household savings for mating competition that is made more fierce by an increase in the male-to-female ratio in the pre-marital cohort. Relative to the empirical work, the theory can clarify a number of important questions: What determines the strength of the savings response by males (or households with a son)? Can women (or households with a daughter) dis-save? What are the conditions under which aggregate savings would go up in response to a higher sex ratio?

This paper explores the links between firms' voluntary disclosures and their cost of capital. Existing studies investigate the relation between mandatory disclosures and cost of capital, and find no cross-sectional effect but a negative association in time-series. In this paper, I find that when disclosure is voluntary firms that disclose their information have a lower cost of capital than firms that do not disclose, but the association between voluntary disclosure and cost of capital for disclosing and non-disclosing firms is positive in aggregate.

We estimate advertising effects in the context of presidential elections. This setting not only provides an important empirical context to study advertising's effects, but it also helps overcome two common challenges in previous advertising studies. First, the gap between elections depreciates past advertising stocks such that large advertising investments are concentrated within a relatively short period.