Columbia Business School Research

In the traffic assignment problem, commuters select the shortest available path to travel from a given origin to a given destination. This system has been studied for over 50 years since Wardrop's seminal work (1952). Motivated by freight companies, which need to ship goods across the network, we study a generalization of the traffic assignment problem in which some competitors control a non-negligible fraction of the total flow. This type of games, usually referred to as atomic games, readily applies to situations in which some competitors have market power.

The silver lining effect predicts that segregating a small gain from a larger loss results in greater psychological value than does integrating them into a smaller loss. Using a generic prospect theory value function, we formalize this effect and derive conditions under which it should occur. We show analytically that if the gain is smaller than a certain threshold, segregation is optimal. This threshold increases with the size of the loss and decreases with the degree of loss aversion of the decision maker.

This paper studies the effects of predictability on the earnings-returns relation for individual firms and for the aggregate. We demonstrate that prices better anticipate earnings growth at the aggregate level than at the firm level, which implies that random-walk models are inappropriate for gauging aggregate earnings expectations. Moreover, we show that the contemporaneous correlation of earnings growth and stock returns decreases with the ability to predict future earnings.

We investigate how making highly consequential, highly undesirable decisions affects emotions and preference for autonomy. We examine individuals facing real or hypothetical decisions to discontinue their infants' life support who either choose personally or have physicians choose for them. Findings from a multidisciplinary approach consisting of a qualitative analysis of in-depth interviews and three laboratory studies reveal that perceived personal causality for making tragic decisions generates more negative feelings than having the same choices externally made.

We study the following question: How does competition influence the inventory holdings of General Motors' dealerships operating in isolated U.S. markets? We wish to disentangle two mechanisms by which local competition influences a dealer's inventory: (1) the entry or exit of a competitor can change a retailer's demand (a sales effect); and (2) the entry or exit of a competitor can change the amount of buffer stock a retailer holds, which influences the probability that a consumer finds a desired product in stock (a service-level effect).

As high-tech markets mature, replacement purchases inevitably become the dominant proportion of sales. Despite the clear importance of replacement, little work examines the separate roles of adoption and replacement. The analysis is complicated by the fact that a consumer's decision to replace a product is dynamic because high-tech markets undergo both rapid improvements in quality and falling prices.

Accounting is often criticized for omitting intangible assets from the balance sheet. This paper points out that the omission is not necessarily a deficiency. There is also an income statement, and the value of intangible (and other) assets can be ascertained from the income statement. Thus, calls for the recognition of "intangible assets" on the balance sheet may be misconceived. The paper lays out the property whereby the income statement corrects for deficiencies in the balance sheet.

Long-term brand value depends on how well a firm understands and recognises the potential of a brand, as well as how well a firm capitalises on that brand potential in the marketplace. Realising this potential, in turn, depends on maximising long-term brand persistence and growth. Brand persistence comes from current customers maintaining their spending on the brand; brand growth results from current customers increasing their spending and from new customers being attracted to the brand in the future.

In this study we estimate empirically the effect of local market conditions on inventory holdings of U.S. automobile dealerships. We show that the influence of competition on a retailer's inventory holdings can be separated into two mechanisms: (1) the entry or exit of a competitor can change a retailer's demand (a sales effect); (2) the entry or exit of a competitor can change the amount of buyer stock a retailer chooses to hold, which influences the probability a consumer finds a desired product in stock (a service level effect).

In this paper, I use anecdotal evidence and logical reasoning to suggest that, despite the use of an extensive database, it is not possible to conclude that passage of the Sarbanes Oxley Act did not have an impact on companies' delisting decisions. Moreover, the instrumental variables used to proxy for SOX effects are too weak and suffer from a significant endogeneity problem given that passage of SOX was driven by many of the economic and control problems that are used to control for market and company factors.

Health is a major component of well-being and quality of life (QOL) and an increasingly costly one. We examine the role of employers for promoting QOL. A meta-analysis examines the impact of fifty well-being programs, which address six health issues and use seven marketing approaches. The analysis indicates that well-being programs and marketing approaches significantly improve employee health and depend on company size and employee gender. Results, based on sixty studies, show there is significant opportunity to efficiently tailor corporate health programs.

We consider a novel variant of the perishable inventory profit management problem faced by a firm that sells a fixed inventory over a finite horizon in the presence of price-adjustment costs. In economics literature, such price-adjustment costs are widely studied and are typically assumed to include a fixed component (e.g., advertising costs), an inventory-dependent component (e.g., inventory relabeling costs), as well as a component that depends on the magnitude of the price adjustment (e.g., cognitive and coordination managerial costs).

In 3 studies, participants made choices between hypothetical financial, environmental, and health gains and losses that took effect either immediately or with a delay of 1 or 10 years. In all 3 domains, choices indicated that gains were discounted more than losses. There were no significant differences in the discounting of monetary and environmental outcomes, but health gains were discounted more and health losses were discounted less than gains or losses in the other 2 domains.

We study experimentally the effect of expectations on whether trust is repaid. Subjects respond with untrustworthy behavior if they see that little is expected of them. This suggests that guilt aversion plays an important role in the repayment of trust.

The final version of this article can be found at http://dx.doi.org/10.1016/j.econlet.2009.04.007.

Due to the increase in diversity of wireless devices, streaming media systems must be capable of serving multiple types of users. Scalable coding allows for adaptations without re-encoding. To account for various viewing capabilities of each user, such as different spatial resolutions, multiple distortion measures are used. In this paper, we examine the question of how to broadcast media packets with multiple distortion measures to multiple users. We cast the problem as a stochastic shortest path problem and use Dynamic Programming to find the optimal policy.

Donald E. Sexton, PhD, a professor of marketing at Columbia University and president of The Arrow Group, Ltd., discusses one key way to link marketing activity to financial performance.

The current work seeks to understand the relationship between luck beliefs and achievement motivation. We hypothesized and found evidence that belief in stable rather than fleeting luck positively relates to achievement motivation (Study 1). Furthermore, belief in stable luck affects achievement motivation via personal agency beliefs (Study 2). These findings add to our understanding of the causal beliefs associated with a sense of mastery and preference for challenging tasks.

Bicultural individuals vary in the degree to which their two cultural identities are integrated versus conflicting — Bicultural Identity Integration (BII). Past research on attribution biases finds that BII influences the way that biculturals shift in response to cultural primes: integrated biculturals shift assimilatively, whereas conflicted biculturals shift contrastively. Proposing that this reflects assimilation versus reactance responses, we tested whether it extends to shifts in self-perceived personality.

This research investigates the effects of refraining from a purchase temptation at one point in time on choices made at a subsequent opportunity to purchase or consume a tempting product. Four experiments involving scenarios and real decisions demonstrate that the salience of restraint at a prior impulse buying opportunity causes consumers to reward themselves subsequently by choosing indulgence over non-indulgence. We show that indulgence is likely to increase only when prior restraint is salient and hence can be used as a justification. As expected, an index of reasons for vs.

This article experimentally explores how the enforcement of cooperative behaviour in a social dilemma is facilitated through institutional as well as emotional mechanisms. Recent studies emphasise the importance of anger and its role in motivating individuals to punish free riders. However, we find that anger also triggers retaliatory behaviour by the punished individuals. This makes the enforcement of a cooperative norm more costly. We show that in addition to anger, "social" emotions like guilt need to be present for punishment to be an effective deterrent of uncooperative actions.

We empirically analyze the illicit trade in cultural property and antiques, taking advantage of different reporting incentives between source and destination countries. We thus generate a measure of illicit trafficking in these goods based on the difference between imports recorded in United States' customs data and the (purportedly identical) trade as recorded by customs authorities in exporting countries.

This paper studies the value of external commitment to policy reforms in the case of WTO/GATT accessions. The accessions often entail reforms that go beyond narrowly defined trade liberalization, and have to overcome fierce resistance in the acceding countries, as reflected in protracted negotiations. We study the growth and investment consequences of WTO/GATT accessions, with attention to a possible selection bias. We find that the accessions tend to raise income, but only for those countries that were subject to rigorous accession procedures.

Many argue that home bias arises because home investors can predict home asset payoffs more accurately than foreigners can. But why doesn't global information access eliminate this asymmetry? We model investors, endowed with a small home information advantage, who choose what information to learn before they invest. Surprisingly, even when home investors can learn what foreigners know, they choose not to: Investors profit more from knowing information others do not know. Learning amplifies information asymmetry.

We examine the extent to which uncertainty delays investment, and the effect of competition on this relationship, using a sample of 1214 condominium developments in Vancouver, Canada built from 1979–1998. We find that increases in both idiosyncratic and systematic risk lead developers to delay new real estate investments. Empirically, a one-standard deviation increase in the return volatility reduces the probability of investment by 13 percent, equivalent to a 9 percent decline in real prices.

This article asserts that any theory or research on fads or fashions in science has to answer three questions clearly and unambiguously. What defines "science"? What defines a "scientific fad" or a "scientific fashion"? What might facilitate the occurrence of scientific fads or fashions so defined? To illustrate this argument, this article critically examines the answers to three questions suggested by Starbuck's article: [Starbuck, W. H. (2009)] The constant causes of never-ending faddishness in the behavioral and social sciences. Scandinavian Journal of Management].

We consider a call center model with multiple customer classes and multiple server pools. Calls arrive randomly over time, and the instantaneous arrival rates are allowed to vary both temporally and stochastically in an arbitrary manner. The objective is to minimize the sum of personnel costs and expected abandonment penalties by selecting an appropriate staffing level for each server pool.

Since 2005, Google has conducted the largest corporate experiment with prediction markets we are aware of. In this paper, we illustrate how markets can be used to study how an organization processes information. We show that market participants are not typical of Google’s workforce, and that market participation and success is skewed towards Google’s engineering and quantitatively oriented employees.

Brand experience is conceptualized as sensations, feelings, cognitions, and behavioral responses evoked by brand-related stimuli that are part of a brand"s design and identity, packaging, communications, and environments. The authors distinguish several experience dimensions and construct a brand experience scale that includes four dimensions: sensory, affective, intellectual, and behavioral.

We establish the convergence of the min-sum message passing algorithm for minimization of a quadratic objective function given a convex decomposition. Our results also apply to the equivalent problem of the convergence of Gaussian belief propagation.

This paper presents a general class of dynamic stochastic optimization problems we refer to as Stochastic Depletion Problems. A number of challenging dynamic optimization problems of practical interest are stochastic depletion problems. Optimal solutions for such problems are difficult to obtain, both from a pragmatic computational perspective as also from a theoretical perspective. As such, simple heuristics are desirable.

We develop a model for the competitive interactions in service industries where firms cater to multiple customer classes or market segments with the help of shared service facilities or processes so as to exploit pooling benefits. Different customer classes typically have distinct sensitivities to the price of service as well as the delays encountered.