Columbia Business School Research

Objectives: To improve measurement of discrimination for health research, we sought to address the concern that explicit self-reports of racial discrimination may not capture unconscious cognition.

Methods: We used 2 assessment tools in our Web-based study: a new application of the Implicit Association Test, a computer-based reaction-time test that measures the strength of association between an individual's self or group and being a victim or perpetrator of racial discrimination, and a validated explicit self-report measure of racial discrimination.

Outside the United States and the United Kingdom, large corporations usually have controlling owners, who are usually very wealthy families. Pyramidal control structures, cross shareholding, and super-voting rights let such families control corporations without making a commensurate capital investment. In many countries, a few such families end up controlling considerable proportions of their countries' economies. Three points emerge.

Prior research suggests that bicultural individuals (i.e., individuals with 2 distinct sets of cultural values) shift the values they espouse depending on cues such as language. The authors examined whether the effects of language extend to a potentially less malleable domain, behavioral decisions, exploring the extent to which bilingual individuals shift the underlying strategies used to resolve choice problems.

In this paper, we investigate the equilibrium behavior of decentralized supply chains with competing retailers under demand uncertainty. We also design contractual arrangements between the parties that allow the decentralized chain to perform as well as a centralized one.

For several decades, U.S. policy in telecommunications and electronic mass media focused on the encouragement of competition. This policy, usually known as deregulation but more accurately described as liberalization, is aimed at an opening of the market to competitors and a reduction of market power. There were numerous elements and proceedings to this policy by the Federal Communications Commission, the states? public service commissions and legislatures, the courts, and Congress. Of these actions, none was more comprehensive than the Telecommunications Act of 1996.

The collapse of Long Term Capital Management ("LTCM") in Fall 1998 and the Federal Reserve Bank's subsequent efforts to orchestrate a bailout raise important questions about the structure of the Bankruptcy Code. The Code contains numerous provisions affording special treatment to financial derivatives contracts, the most important of which exempts these contracts from the "automatic stay" and permits counterparties to terminate derivatives contracts with a debtor in bankruptcy and seize underlying collateral.

We examine the link between equity risk premiums and demographic changes using a very long sample over the whole twentieth century for the US, Japan, UK, Germany and France, and a shorter sample covering the last third of the twentieth century for fifteen countries. We find that demographic variables significantly predict excess returns internationally. However, the demographic predictability found in the US by past studies for the average age of the population does not extend to other countries.

Motivated by applications in telephone call centers, we consider a service system model with m customer classes and r server pools. The model is one with doubly stochastic arrivals, which means that the m-vector λ of instantaneous arrival rates is allowed to vary both temporally and stochastically.

In this paper, we analyze the optimal policy for a risk averse agent who wants to sell a large block of shares of a risky security in the presence of price impact and transactions costs. Our framework reduces to the standard Merton portfolio problem in the absence of any market frictions. Optimal liquidation results in revenue distributions which are substantially different from those generated by a naive strategy. The main tradeoff involves choosing between revenue distributions which have high means versus those which have low variances.

The conventional wisdom views high levels of education as a prerequisite for democracy. This paper shows that existing evidence for this view is based on cross-sectional correlations, which disappear once we look at within-country variation. In other words, there is no evidence that countries that increase their education are more likely to become democratic.

Age differences in intrinsic and extrinsic motivation and the relationships of each to academic outcomes were examined in an ethnically diverse sample of 797 3rd-grade through 8th-grade children. Using independent measures, the authors found intrinsic and extrinsic motivation to be only moderately correlated, suggesting that they may be largely orthogonal dimensions of motivation in school.

This paper provides a model of investment timing by managers in a decentralized firm in the presence of agency conflicts and information asymmetries. When investment decisions are delegated to managers, contracts must be designed to provide incentives for managers to both extend effort and truthfully reveal private information. Using a real options approach, we show that an underlying option to invest can be decomposed into two components: a manager's option and an owner's option. The implied investment behavior differs significantly from that of the first-best no-agency solution.

Bayesian learning implies decreasing weights on prior beliefs and increasing weights on the accuracy of the analyst?s past forecast record, as the number of forecast errors comprising her forecast record (its length) increases. Consistent with this model of investor learning, empirical tests show that investors? reactions to forecast news are increasing in the product of the accuracy and length of analysts? forecast records. Moreover, the Bayesian learning predicted by our model is more descriptive of investor reactions than is a static model which predicts that investors?

A general approach to improving simulation accuracy uses information about auxiliary control variables with known expected values to improve the estimation of unknown quantities. We analyze weighted Monte Carlo estimators that implement this idea by applying weights to independent replications. The weights are chosen to constrain the weighted averages of the control variables. We distinguish two cases (unbiased and biased), depending on whether the weighted averages of the controls are constrained to equal their expected values or some other values.

Contagion is usually defined as correlation between markets in excess of what would be implied by economic fundamentals; however, there is considerable disagreement regarding the definitions of the fundamentals, how the fundamentals might differ across countries, and the mechanisms that link the fundamentals to asset returns. Our research takes, as a starting point, a two-factor model with time-varying betas that accommodates various degrees of market integration between different markets.

Despite the influx of measures which can be customized to the demands of each business unit (e.g., customer satisfaction surveys and quality indices), many firms have been dogged in their reliance on standardized measures (e.g., conventional financial metrics) in performance evaluation. In this paper, we consider one justification: though customized measures may more accurately target the goals of a particular unit, standardized measures may offer more meaningful opportunities for relative performance evaluation.

A liquidity trader wishes to trade a ?xed number of shares within a certain time horizon and to minimize the mean and variance of the costs of trading. Explicit formulas for the optimal trading strategies show that risk-averse liquidity traders reduce their order sizes over time and execute a higher fraction of their total trading volume in early periods when price volatility or liquidity increases. In the presence of transaction fees, numerical simulations suggest that traders want to trade more frequently when price volatility goes up or liquidity declines.

Psychological research has repeatedly demonstrated two seemingly irreconcilable human tendencies. People are motivated towards internal consistency, or acting in accordance with stable, self-generated preferences. Simultaneously though, people demonstrate considerable variation in the content of their preferences, often induced by subtle external influences. The current studies test the hypothesis that decision makers resolve this tension by sustaining illusions of preference consistency, which, in turn, confer psychological benefits.

We present a model of nonprofit governance built on two assumptions: (1) organizations wish to hold precautionary savings in order to smooth expenditures; and (2) it is relatively easy for managers to divert these funds for personal use. Hence, donors face a trade off between expenditure smoothing and donation dissipation.We examine the model's predictions using panel data on U.S. nonprofits.

Suppose you open talks with an important customer by making an aggressive first offer. He becomes offended. You back off a bit; he responds by trying to take advantage. This back-and-forth negotiation process, which many liken to a dance, can leave you shuffling endlessly around the issues, while resentment builds on both sides. Fortunately, a versatile strategy exists that allows you to take the lead in the dance: multiple equivalent simultaneous offers, or MESOs.

This paper is concerned with the issue of how to balance bailouts (or "lending into arrears") with debt reductions (or "private sector involvement") in the resolution of sovereign debt crises. It provides a review of recent proposals to regulate sovereign debt renegotiations under a Sovereign Debt Restructuring Mechanism (SDRM). In addition to defending a sovereign bankruptcy proposal we have put forward in recent work, this article proposes a major reorientation of the IMF's role in sovereign debt crises.

In the Public Company Accounting Oversight Board's Sep 2004 Standing Advisory Group Meeting, one of the sessions was devoted to verifiability concerns regarding fair values. At that meeting, some participants expressed the opinion that accounting estimates pose broader problems beyond computing fair values, and investors need to be educated about the role of estimates in financial statements. This paper suggests an extension to the existing accounting model to allow users to better understand the role of estimates/forecasts in financial statements.

Combining survey responses and trading records of clients of a German retail broker, this paper examines some of the causes for the apparent failure to buy and hold a well-diversified portfolio. The subjective investor attributes gleaned from the survey help explain the variation in actual portfolio and trading choices. Self-reported risk aversion is the single most important determinant of both portfolio diversification and turnover; other things equal, investors who report being more risk tolerant hold less diversified portfolios and trade more aggressively.