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previous Boston mechanism, a priority matching mechanism, and the case in favor of the change to a strategy-proof mechanism … unassigned students could have been assigned to one of their stated choices with a different strategy under the current mechanism …. This interaction between sophisticated and unsophisticated players identifies a new rationale for strategy-proof mechanisms …
Persistent link: https://www.econbiz.de/10012466706
formalize this cognitive bias in a simple model of distorted Bayesian updating. We then examine strategy changes made by … professional football coaches. We find they are more likely to revise their strategy after a loss than a win -- even for narrow … expected, and the offensive strategy is revised even when failure is attributable to the defense. These results are consistent …
Persistent link: https://www.econbiz.de/10012461180
We survey 885 institutional venture capitalists (VCs) at 681 firms to learn how they make decisions across eight areas: deal sourcing; investment selection; valuation; deal structure; post-investment value-added; exits; internal firm organization; and relationships with limited partners. In selecting...
Persistent link: https://www.econbiz.de/10012456092
This paper studies asset pricing in a setting in which idiosyncratic risk in human capital is not fully insurable. Firms use long-term contracts to provide insurance to workers, but neither side can commit to these contracts; furthermore, worker-firm relationships have endogenous durations owing...
Persistent link: https://www.econbiz.de/10012480625
This paper highlights a previously-unnoticed property of commonly-used discrete choice models, which is that they feature parallel demand curves. Specifically, we show that in random utility models, inverse aggregate demand curves shift in parallel with respect to variety if and only if the...
Persistent link: https://www.econbiz.de/10012481632
We investigate whether a model with a time-varying probability of economic disaster can explain the pricing of collateralized debt obligations, both prior to and during the 2008-2009 financial crisis. Namely, we examine the pricing of tranches on the CDX, an index of credit default swaps on...
Persistent link: https://www.econbiz.de/10012455957
This paper compares different solution methods for computing the equilibrium of dynamic stochastic general equilibrium (DSGE) models with rare disasters along the line of those proposed by Rietz (1988), Barro (2006}, Gabaix (2012), and Gourio (2012). DSGE models with rare disasters require...
Persistent link: https://www.econbiz.de/10012456676
We document that even though the normal distribution provides a good approximation to GDP fluctuations, it severely underpredicts "macroeconomic tail risks," that is, the frequency of large economic downturns. Using a multi-sector general equilibrium model, we show that the interplay of...
Persistent link: https://www.econbiz.de/10012457801
We examine the mechanics of deterrence and intervention when fear is a motive for conflict. We contrast results obtained in a complete information setting, where coordination is easy, to those obtained in a setting with strategic risk, where players have different assessments of their...
Persistent link: https://www.econbiz.de/10012464685
A single macroeconomic factor based on growth in the capital share of aggregate income exhibits significant explanatory power for expected returns across a range of equity characteristic portfolios and non-equity asset classes, with risk price estimates that are of the same sign and similar in...
Persistent link: https://www.econbiz.de/10012457922