Motivated by research in psychology and experimental economics, we assume that investors update their beliefs about an asset's value upon observing the price, but only when the price clearly reveals that others obtained private information that differs from their own private information. In...

We exploit new flight connections from small cities to international airportsas a quasi-natural experiment to study the effects of local labor match oncorporate investments. Using a cosine similarity of occupational makeups,we find that capital expenditures, R&D, and acquisitions are higher...

We study the effects of employee health on corporate innovation by exploiting staggered medical cannabis legalization across states from 1995 to 2020. Medical cannabis legalization increases medical access, thereby significantly influences employee health. Using a difference-in-differences...

The convention in calculating trading costs in corporate bond markets is to assume that dealers provide liquidity to non-dealers (customers) and calculate average bid-ask spreads that customers pay dealers. We show that customers often provide liquidity in corporate bond markets, and thus,...

Social psychologists have documented the false consensus effect, which refers to the tendency for people to overestimate their similarity to others. I model the false consensus effect by assuming that agents overestimate the correlation of their private signal errors. By modifying a simple...

We examine the welfare effects of regulation in a model where firms can shroud add-on costs, such as penalty fees for consumer financial products. In isolation, imposing price controls or disclosure mandates on such fees can increase or decrease welfare, even when these regulations have no...

We examine in real-time the recommendations made by analysts on the CNBC segment Making Money Now. The recommendations are followed by mandatory disclosures following Title V of the Sarbanes Oxley Act of 2002 and NYSE and NASD rules. We measure reaction to both the recommendation event and the...