Columbia Business School Research

This paper focuses on add-on sales to determine both their value per se and their value as a reflexive measure of brand equity. Specifically, this paper examines the "accessory premium" for automobiles, i.e., accessories installed by dealers at the time of sale. Using J.D. Power Data, the authors find that higher add-on accessory sales accrue to higher equity brands which make accessory sales a potentially useful measure of brand equity (J. Marketing 67: 1?17, 2003). In addition, the authors examine how the revenue premium metric varies by age cohort.

I analyze the effects of four types of medical innovation and cancer incidence on US cancer mortality rates during the period 2000–2009, by estimating difference-in-differences models using longitudinal (annual) data on ∼60 cancer sites (breast, colon, etc.). The outcome measure used is not subject to lead-time bias. I control for mean age at diagnosis, the stage distribution of patients at time of diagnosis, and the sex and race of diagnosed patients.

This paper presents a comprehensive analysis of mortgage delinquency between 2004 and 2008 using a unique loan-level dataset from a major national mortgage bank. Our analysis highlights two major problems underlying the mortgage crisis: a heavy reliance on mortgage brokers who tend to originate lower quality loans, and a high prevalence of low-documentation loans—known in the industry as "liars' loans"—which results in information falsification by borrowers.

I examine the impact of pharmaceutical innovation, as measured by the vintage (world launch year) of prescription drugs used, on longevity using longitudinal, country-level data on 30 developing and high-income countries during the period 2000–2009. I control for fixed country and year effects, real per capita income, the unemployment rate, mean years of schooling, the urbanization rate, real per capita health expenditure (public and private), the DPT immunization rate among children ages 12–23 months, HIV prevalence and tuberculosis incidence.

Longitudinal, disease-level data are used to analyze the impact of pharmaceutical innovation on longevity (mean age at death) and medical expenditure in France during the period 2000–2009. The estimates imply that pharmaceutical innovation increased mean age at death by 0.29 years (3.43 months) during this period—about one-fifth of the total increase in longevity. This estimate is smaller than those obtained in previous studies of Germany and the U.S., but the rate of adoption of new drugs was lower in France.

In a number of service systems, there can be substantial latitude to vary service rates. However, although speeding up service rate during periods of congestion may address a present congestion issue, it may actually exacerbate the problem by increasing the need for rework. We introduce a state-dependent queuing network where service times and return probabilities depend on the “overloaded” and “underloaded” state of the system.

This paper examines how organizations use employee networks to contend with job seekers' search behavior. According to prior research, in markets where job seekers engage in nonsequential job search, organizations respond with tactics such as exploding offers and recruiting candidates earlier. In this paper, I posit that organizations have a social structural response. I argue that in an attempt to avoid problems related to candidates' job search, organizations are more likely to provide job offers to candidates with friends in the hiring organization than to those without friends.

Friendly gestures (e.g., smiles, flattery, favors) typically build trust and earn good will. However, we propose that people feel unsettled when enemies initiate friendly gestures. To resolve these sensemaking difficulties, people find order through superstitious reasoning about friendly enemies. Supporting this theorizing, friendly enemies created sensemaking difficulty, which in turn mediated people's tendencies to blame them for coincidental negative outcomes (Experiment 1).

We structurally estimate a model in which agents' information processing biases can cause predictability in firms' asset returns and investment inefficiencies. We generalize the neoclassical investment model by allowing for two biases — overconfidence and over-extrapolation of trends — that distort agents' expectations of firm productivity. Our model's predictions closely match empirical data on asset pricing and firm behavior. The estimated bias parameters are well-identified and exhibit plausible magnitudes.

The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition, which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular, but the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted.

The regulation of bank capital as a means of smoothing the credit cycle is a central element of forthcoming macro-prudential regimes internationally. For such regulation to be effective in controlling the aggregate supply of credit it must be the case that: (i) changes in capital requirements affect loan supply by regulated banks, and (ii) unregulated substitute sources of credit are unable to offset changes in credit supply by affected banks. This paper examines micro evidence—lacking to date—on both questions, using a unique data set.

We study the equilibrium properties of an overlapping-generation economy where agents choose where to locate and how much housing to own, and city residents vote on the number of new building permits every period. Undersupply of housing persists in equilibrium under conditions we characterize. City residents invest in housing because they expect their investment to be protected by a majority opposed to urban growth. They vote against growth because they have invested in local housing.

The current research explores how awareness of shared attention influences attitude formation. We theorized that sharing the experience of an object with fellow group members would increase elaborative processing, which in turn would intensify the effects of participant mood on attitude formation. Four experiments found that observing the same object as similar others produced more positive ratings among those in a positive mood, but more negative ratings among those in a negative mood.

Marketing variables that are included in consumer discrete choice models are often endogenous. Extant treatments using likelihood-based estimators impose parametric distributional assumptions, such as normality, on the source of endogeneity. These assumptions are restrictive because misspecified distributions have an impact on parameter estimates and associated elasticities. The normality assumption for endogeneity can be inconsistent with some marginal cost specifications given a price-setting process, although they are consistent with other specifications.

We propose a tractable, data-driven demand estimation procedure based on the use of maximum entropy (ME) distributions, and apply it to a stochastic capacity control problem motivated from airline revenue management. Specifically, we study the two fare-class "Littlewood" problem in a setting where the firm has access to only potentially censored sales observations. We propose a heuristic that iteratively fits an ME distribution to all observed sales data, and in each iteration selects a protection level based on the estimated distribution.

We develop a theoretical framework in which political and economic cycles are jointly determined. These cycles are driven by three political economy frictions: policymakers are non-benevolent, they cannot commit to policies, and they have private information about the tightness of the government budget and rents. Our first main result is that, in the best sustainable equilibrium, distortions to production emerge and never disappear even in the long run.

Power is a psychological accelerator, propelling people toward their goals; however, these goals are often egocentrically focused. Perspective-taking is a psychological steering wheel that helps people navigate their social worlds; however, perspective-taking needs a catalyst to be effective.

Utilizing theory and empirical insights from psychology and behavioural economics, this paper examines individuals' cognitive and motivational barriers to adopting climate change adaptation and mitigation measures that increase consumer welfare. We explore various strategies that take into account the simplified decision-making processes used by individuals and resulting biases. We make these points by working through two examples: (1) investments in energy efficiency products and new technology and (2) adaptation measures to reduce property damage from future floods and hurricanes.

We provide conditions under which contingent claim and asset demands are consistent with state independent Expected Utility maximization. The paper focuses on the case of a single commodity and demands are allowed to be functions of probabilities and not just prices and income.

Maintaining auditor independence is vital to the auditing profession. This article argues that the auditor-client relationship exhibits special traits that make maintaining auditor independence easier than in other accountant-client relationships. In particular, the auditor-client relationship satisfies a one-sided separability condition, as the auditor is not involved in the structuring of transactions (unlike other accountants).

We study the optimal composition of corporate boards. Directors can be either monitoring or advisory types. Monitoring constrains the empire-building tendency of chief executive officers (CEOs). If shareholders control the board nomination process, a non-monotonic relation ensues between agency problems and board composition. To preempt CEO entrenchment, shareholders may assemble an adviser-heavy board. If a powerful CEO influences the nomination process, this may result in a more monitor-heavy board.

Background: Although the relationship between obsessive-compulsive disorder (OCD) and obsessive-compulsive personality disorder (OCPD) has long been debated, clinical samples of OCD (without OCPD) and OCPD (without OCD) have never been systematically compared. We studied whether individuals with OCD, OCPD, or both conditions differ on symptomatology, functioning, and a measure of self-control: the capacity to delay reward.

We are entering the 4th generation of TV, based on the online transmission of video. This article explores the emerging media system, its policy issues, and a way to resolve them. It analyzes the beginning of a new version of the traditional telecom interconnection problem. The TV system will be diverse in the provision of technology, standards, devices, and content elements. For reasons of interoperation, financial settlements, etc., this diversity will be held together by intermediaries that are today called cloud providers, and through whom much of media content will flow.

We study consumers' click behavior on organic and sponsored links after a keyword search at an Internet search engine. Using a dataset of individual-level click activity after keyword searches from a leading search engine in Korea, we find that consumers' click activity after a keyword search is quite low and is heavily concentrated on the organic list. However, searches of less popular keywords (i.e., keywords with lower search volume) are associated with more clicks per search and a larger fraction of sponsored clicks.

Substitution decisions have been examined from a variety of perspectives. The economics literature measures cross-price elasticity, operations research models optimal assortments, the psychology literature studies goals in conflict, and marketing research has examined substitution-in-use, brand switching, stockouts, and self-control. We integrate these perspectives into a common framework for understanding consumer substitution decisions; their specific drivers (availability of new alternatives, internal vs.

We examine changes in banks' market-to-book ratios over the last decade, focusing on the dramatic and persistent declines witnessed during the financial crisis. The extent of the decline and its persistence cannot be explained by the delayed recognition of losses on existing financial instruments. Rather, it is declines in the values of intangibles — including customer relationships and other intangibles related to business opportunities — along with unrecognized contingent obligations that account for most of the persistent decline in market-to-book ratios.

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.

The idea that group contexts can intensify emotions is centuries old. Yet, evidence that speaks to how, or if, emotions become more intense in groups remains elusive. Here we examine the novel possibility that group attention — the experience of simultaneous coattention with one's group members — increases emotional intensity relative to attending alone, coattending with strangers, or attending nonsimultaneously with one's group members. In Study 1, scary advertisements felt scarier under group attention.

The basic premise of this paper is that academic accountants and financial accounting standard setters have traded places in their normative vs positive orientations. Academics have shifted from normative to positive, while standard setters have shifted from positive to normative.

Women outnumber men in undergraduate enrollments, but they are much less likely than men to major in mathematics or science or to choose a profession in these fields. This outcome often is attributed to the effects of negative sex-based stereotypes. We studied the effect of such stereotypes in an experimental market, where subjects were hired to perform an arithmetic task that, on average, both genders perform equally well.