Behavioral Economics Commons^™

Inference In Near-Singular Regression, Peter C. B. Phillips

Research Collection School Of Economics

This paper considers stationary regression models with near-collinear regressors. Limit theory is developed for regression estimates and test statistics in cases where the signal matrix is nearly singular in finite samples and is asymptotically degenerate. Examples include models that involve evaporating trends in the regressors that arise in conditions such as growth convergence. Structural equation models are also considered and limit theory is derived for the corresponding instrumental variable (IV) estimator, Wald test statistic, and overidentification test when the regressors are endogenous. It is shown that near-singular designs of the type considered here are not completely fatal to least squares …

Increasing College Opportunity: School Counselors And Fafsa Completion, Laura Owen, Erik Westlund

Journal of College Access

Closing postsecondary opportunity gaps has become a national, state and local educational priority. To help eliminate these gaps, the US Department of Education initiated a project that provided real time student level Free Application for Federal Student Aid (FAFSA) completion status to large urban school districts. Leveraging this information, school counselors identified and supported students and families as they navigated the financial aid process, resulting in statistically significant impacts on FAFSA completion and college attendance.

Years Of Good Life Based On Income And Health: Re-Engineering Cost-Benefit Analysis To Examine Policy Impact On Wellbeing And Distributive Justice, Richard Cookson, Owen Cotton-Barrett, Matthew D. Adler, Miqdad Asaria, Toby Ord

Faculty Scholarship

No abstract provided.

Does Medical Malpractice Law Improve Health Care Quality?, Michael D. Frakes, Anupam B. Jena

Faculty Scholarship

Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed using data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms — e.g., damage caps — we estimate that the current …

In Search Of The Absent Shareholders: A New Solution To Retail Investors' Apathy, Kobi Kastiel, Yaron Nili

Faculty Scholarship

Corporate law scholars have taken investors' rational apathy for granted for many years, considering it a necessary evil once ownership is no longer closely held. But how significant is retail investors' apathy and what is its impact? This Article is the first to provide comprehensive data on the true magnitude of retail investors' apathy and its negative impact on corporate governance. Building on behavioral economics tools, this Article then presents a novel solution that could substantially mitigate, if not fully eliminate, this long-standing problem of investors' rational apathy, with minimal regulatory burden. The solution is based on the premise that …

Understanding The Influencers Of Second-Hand Apparel Shopping Behavior, Robyn Hobbs

Theses and Dissertations (Comprehensive)

Shopping for second-hand apparel is rapidly growing and has become a notable segment of the retail market. The purpose of this study is to determine what influences consumers when shopping second-hand for apparel products in-store and online. According to the existing literature, a number of key factors play significant roles for second-hand apparel shopping consumer decisions. They include: social, costs, trends and environmental influencers. Past research has not concentrated in-depth on the hedonistic and social influences of second-hand apparel shopping, financial factors, and time spent shopping for second-hand apparel. This study has observed the socio-demographic profile of second-hand shoppers, what …

The Behavioral Impacts Of Property Tax Relief: Salience Or Framing?, Phuong Nguyen-Hoang, John Yinger

Center for Policy Research

New York State’s School Tax Relief Program, STAR, provides state-funded exemptions from school property taxes. From 2006-07 to 2008-09, these exemptions were supplemented with rebates, which arrived as a check in the mail. The purpose of this paper is to determine whether these two algebraically equivalent but administratively distinct policies of tax relief led to different behavioral responses. Drawing on behavioral economics, we explore the impact of STAR on the price elasticity of demand for school quality based on the concepts of salience and framing. Our main results are that the behavioral impact of the STAR provisions are larger (1) …

The Social Relations Of Consumption: Corporate Law And The Meaning Of Consumer Culture, David G. Yosifon

BYU Law Review

A mature assessment of the society we are making for ourselves, and the legacy we are leaving to the future, must come to terms with consumer culture. Theoretical discourse, as well as common experience, betray persistent ambiguity about what consumerism means to and says about us. In this Article, I argue that this ambiguity can in part be explained by examining the social relations of consumption in contemporary society. These involve, crucially, the relationship between producer and consumer that is dictated by corporate governance law, and embodied in the decision-making dynamics of the directors who command corporate operations. The enigmatic …

Behavioral Finance: Its History And Its Future, Robert Christopher Hammond

Selected Honors Theses

The field of behavioral finance has attempted to explain a litany of biases, heuristics, and

inefficiencies present in financial markets since its creation in the 1980’s. This paper is structured as a comprehensive literature review of behavioral finance, and includes both the seminal works as well as more recent papers. The various subtopics of behavioral finance will also be analyzed, which include loss aversion, corporate finance, and momentum/contrarian investing. Finally, this paper will draw unique conclusions across behavioral finance and hypothesize about what topics within behavioral finance are likely to yield the most interesting research in the near future.

Real Estate Investments In Asia: More Than A Place To Call Home, John Lim

Asian Management Insights

Real estate investment in Asia is currently trending. But what does the future hold?

The Effect Of New York City Sports Outcomes On The Stock Market, Nir Levy

Undergraduate Economic Review

This thesis investigates whether sports outcomes for New York City based teams affect the daily returns, volatility or trading volume of major stock indexes in the United States. I research whether events that affect local mood in a major financial center can influence national stock indexes by swaying the sentiment of workers in the financial sector. By performing an event study I found evidence that returns are abnormally high following championships won by New York City professional sports teams. Returns are abnormally low and volume is abnormally high following elimination from a championship round.

Mandatory Process, Matthew J.B. Lawrence

Indiana Law Journal

This Article suggests that people tend to undervalue their procedural rights—their proverbial “day in court”—until they are actually involved in a dispute. The Article argues that the inherent, outcome-independent value of participating in a dispute resolution process comes largely from its power to soothe a person’s grievance— their perception of unfairness and accompanying negative emotional reaction—win or lose. But a tendency to assume unchanging emotional states, known in behavioral economics as projection bias, can prevent people from anticipating that they might become aggrieved and from appreciating the grievance-soothing power of process. When this happens, people will waive their procedural rights …

Essays On International Risk-Return Trade-Off Relations, Liang Meng

Finance Theses & Dissertations

This dissertation consists of two essays on the international risk-return trade-off relations. The first essay is titled “The Role of the US Market on International Risk-Return Trade-Off Relations” and the second essay is titled “The Role of Investor Sentiment on International Risk-Return Trade-Off Relations”.

In our first essay, we study the intertemporal risk-return trade-off relations based on returns from 18 international markets. Our main contribution is that we find the US market plays an important role affecting the international risk-return trade-off. We present striking new empirical evidence that the inclusion of US market variables significantly changes the estimated risk-return trade-off …

Sense And Sensibility Of Ownership: Type Of Ownership Experience And Valuation Of Goods, Xiao-Tian Wang, Lay See Ong, Jolene Tan

Research Collection School of Social Sciences

This study examined how the type of ownership experience affects the valuation of a good. We hypothesized that the sense of ownership is a psychological derivative of resource acquisition and allocation. We predicted a valuation order of stable ownership or no-ownership

Behavioral Public Choice And The Law, Gary M. Lucas Jr., Slaviša Tasić

Faculty Scholarship

Behavioral public choice is the study of irrationality among political actors. In this context, irrationality means systematic bias, a deviation from rational expectations, or other departure from economists’ conception of rationality. Behavioral public choice scholars extend the insights of behavioral economics to the political realm and show that irrational behavior is an important source of government failure. This Article makes an original contribution to the legal literature by systematically reviewing the findings of behavioral public choice and explaining their implications for the law and legal institutions. We discuss the various biases and heuristics that lead political actors to support and …

Impact Of International Remittances On Schooling In The Philippines: Does The Relationship To The Household Head Matter?, Tomoki Fujii

Research Collection School Of Economics

We study the impact of international remittances on schooling in the Philippines, taking into account the school-age individual's relationship to the household head. This consideration is important because employment opportunities abroad may be taken at the expense of the quality of child rearing. Our estimation results indicate that there are, indeed, significant negative guardian effects on school attendance and education expenditures when children with overseas parents are looked after by a relative other than a parent or grandparent. However, these negative effects tend to be outweighed by the positive impact of remittance flows from overseas.

How Does The Stock Market Value The Renewable Energy Sector: A Public Announcement Analysis And Test Of The Efficient Market Hypothesis, Jack Crampton

Journal of Environmental and Resource Economics at Colby

This study analyzes the market reaction to public announcements in the stock market. The efficient market hypothesis is put to test and similar studies are reexamined in the context of the renewable energy sector. Through fixed effects models, we can assess the validity to the efficient market hypothesis and assess how the market values the clean energy sector.

Boom & Bust: The Perils Of Guaranteed Long Term Contracts. Evidence From Ops100 Performance Over The Contract Cycle, Heather M. O'Neill

Business and Economics Faculty Publications

This study focuses on panel data of 256 MLB free agent hitters under the 2006-2011 Collective Bargaining Agreement (CBA) to demonstrate that hitters, on average, increase their offensive production, measured by OPS100, during the last year of their contract and subsequently underperform the first year of the newly signed long term contract. The contract year phenomenon arises from the incentive to land a lucrative guaranteed contract for players not intending to retire. Signing a long term guaranteed contract creates an incentive to shirk (underperform) the first year of the new contract because performance and pay become unlinked and the need …

Three Essays On Dividend Policy, Mehmet Deren Caliskan

Finance Theses & Dissertations

This dissertation considers paying earnings out as dividends a conservative policy as opposed to investing earnings in to value-increasing projects. Based on this view, this dissertation explores the effect of chief executive officers’ (CEO) risk preferences on dividend policy, market’s reaction to dividend policy changes, and the effect of dividend policy on firm financial distress. The first chapter hypothesizes that risk seeking CEOs will be less likely to pay dividends compared to conservative CEOs. The second chapter hypothesizes that when the market sentiment is high (i.e., when investors are willing to take risk) firms that omit dividends should outperform the …

Inference Under Stability Of Risk Preferences, Levon Barseghyan, Francesca Molinari, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

We leverage the assumption that preferences are stable across contexts to partially identify and conduct inference on the parameters of a structural model of risky choice. Working with data on households' deductible choices across three lines of insurance coverage and a model that nests expected utility theory plus a range of non-expected utility models, we perform a revealed preference analysis that yields household-specific bounds on the model parameters. We then impose stability and other structural assumptions to tighten the bounds, and we explore what we can learn about households' risk preferences from the intervals defined by the bounds. We further …