Faculty News | Financial Times | 28
The predictability principle
Re: Lauren Cohen & Christopher Malloy
Lauren Cohen and Christopher Malloy of Harvard Business School, along with Karl Diether of the Tuck School of Business at Dartmouth, ran a fascinating study on voting patterns in the US Congress and discovered what everyone knows: politicians vote for their constituents. Much more importantly, they found the voting pattern of "interested" legislators – those with lots of companies or workers who would be affected by a new law – offered a profitable guide to what would happen to share prices after the law was passed.