• Article

CDS Trading and Nonrelationship Lending Dynamics

By: Jung Koo Kang, Christopher Williams and Regina Wittenberg-Moerman

We investigate how credit default swaps (CDSs) affect lenders’ incentives to initiate new lending relationships. We predict that CDSs reduce adverse selection that nonrelationship lead arrangers face when competing for loans. Consistently, we find that a loan is...  View Details

Keywords: Credit Default Swaps; CDS Market; Non-relationship Lending; Debt Contracts; Adverse Selection; Lending Monitoring; Cross-selling

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Kang, Jung Koo, Christopher Williams, and Regina Wittenberg-Moerman. "CDS Trading and Nonrelationship Lending Dynamics." Review of Accounting Studies 26, no. 1 (March 2021): 258–292.

• 2021
• Working Paper

Dynamic Competition for Customer Memberships

By: Cristian Chica and Jorge Tamayo

A competitive two-period membership (subscription) market is analyzed. Two symmetric firms charge a “membership” fee that allows consumers to buy products or services at a given unit price for both periods. Firms can choose between long- or short-term memberships. When...  View Details

Keywords: Competitive Price Discrimination; Membership; Dynamic Competition; Customers; Markets; Competition

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Chica, Cristian, and Jorge Tamayo. "Dynamic Competition for Customer Memberships." Harvard Business School Working Paper, No. 21-091, March 2021.

• January 2021
• Article

The Effects of Menu Costs on Retail Performance: Evidence from Adoption of the Electronic Shelf Label Technology

By: Ioannis Stamatopoulos, Achal Bassamboo and Antonio Moreno

We use the adoption of electronic shelf labels (ESLs) by an international grocery retailer in 2015 to identify the effects of physical menu costs (i.e., labor and material costs of price adjustment) on retail performance. We find that the installation of ESLs increased...  View Details

Keywords: Retail Operations; Dynamic Pricing; Revenue Management; Operations; Price; Revenue; Management; Retail Industry

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Stamatopoulos, Ioannis, Achal Bassamboo, and Antonio Moreno. "The Effects of Menu Costs on Retail Performance: Evidence from Adoption of the Electronic Shelf Label Technology." Management Science 67, no. 1 (January 2021): 242–256.

• Oct 2020
• Conference Presentation

Optimal, Truthful, and Private Securities Lending

By: Emily Diana, Michael J. Kearns, Seth Neel and Aaron Leon Roth

We consider a fundamental dynamic allocation problem motivated by the problem of securities lending in financial markets, the mechanism underlying the short selling of stocks. A lender would like to distribute a finite number of identical copies of some scarce resource...  View Details

Keywords: Differential Privacy; Mechanism Design; Finance; Mathematical Methods

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Diana, Emily, Michael J. Kearns, Seth Neel, and Aaron Leon Roth. "Optimal, Truthful, and Private Securities Lending." Paper presented at the 1st Association for Computing Machinery (ACM) International Conference on AI in Finance (ICAIF), October 2020.

• 2021
• Working Paper

Corporate Environmental Impact: Measurement, Data and Information

By: David Freiberg, DG Park, George Serafeim and T. Robert Zochowski

As an organization’s environmental impact has become a central societal consideration, thereby affecting industry and organizational competitiveness, interest in measuring and analyzing environmental impact has increased. We develop a methodology to derive comparable...  View Details

Keywords: Environment; Impact; Measurement; Environmental Ratings; Corporate Valuation; Financial Materiality; Sustainability; Environmental Impact; Environmental Strategy; Impact-Weighted Accounts; IWAI; Environmental Sustainability; Corporate Social Responsibility and Impact; Measurement and Metrics; Valuation

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Freiberg, David, DG Park, George Serafeim, and T. Robert Zochowski. "Corporate Environmental Impact: Measurement, Data and Information." Harvard Business School Working Paper, No. 20-098, March 2020. (Revised February 2021.)

• January 2020
• Article

The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation

By: Tatyana Deryugina, Alexander MacKay and Julian Reif

We study the dynamics of residential electricity demand by exploiting a natural experiment that produced large and long-lasting price changes in over 250 Illinois communities. Using a flexible difference-in-differences matching approach, we estimate that the price...  View Details

Keywords: Electricity Demand; Consumption Dynamics; Energy; Policy; Demand and Consumers; Price; Mathematical Methods

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Deryugina, Tatyana, Alexander MacKay, and Julian Reif. "The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation." American Economic Journal: Applied Economics 12, no. 1 (January 2020): 86–114.

• December 2019
• Case

CME Group in 2019

By: José B. Alvarez, Forest Reinhardt and Natalie Kindred

Chicago-based CME Group is the world’s largest futures and options marketplace, with annual trading volume of over 4.8 billion contracts in 2018. This case is set in late 2019, as heightened perceptions of risk stemming from the U.S.-China trade war are driving record...  View Details

Keywords: Financial Markets; Risk Management; Futures and Commodity Futures; Trade; Price; Competition; Risk and Uncertainty; Competitive Strategy; United States; China; Brazil

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Alvarez, José B., Forest Reinhardt, and Natalie Kindred. "CME Group in 2019." Harvard Business School Case 520-048, December 2019.

• December 2019
• Article

Invest in Information or Wing It? A Model of Dynamic Pricing with Seller Learning

By: Guofang Huang, Hong Luo and Jing Xia

Pricing idiosyncratic products is often challenging because the seller, ex ante, lacks information about the demand for individual items. This paper develops a model of dynamic pricing for idiosyncratic products that features the optimal stopping structure and a seller...  View Details

Keywords: Dynamic Pricing; Idiosyncratic Products; Item-specific Demand; Demand Uncertainty; Active Seller Learning; The Value Of Information; Price; Information; Value; Learning

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Huang, Guofang, Hong Luo, and Jing Xia. "Invest in Information or Wing It? A Model of Dynamic Pricing with Seller Learning." Management Science 65, no. 12 (December 2019): 5556–5583.

• Article

Economic Principles for Medicare Reform

By: Amitabh Chandra and Craig Garthwaite

In this article, we develop an economic framework for Medicare reform that highlights trade-offs that reform proposals should grapple with but often ignore. Central to our argument is a tension in administratively set prices, which may improve short-term efficiency but...  View Details

Keywords: Medicare; Value-based Care; Health Care Reform; Markets In Health Care; Health Care and Treatment; Value; Governing Rules, Regulations, and Reforms

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Chandra, Amitabh, and Craig Garthwaite. "Economic Principles for Medicare Reform." Annals of the American Academy of Political and Social Science 686, no. 1 (November 2019): 63 – 92.

• July 2019
• Article

Optimal Capital Structure and Bankruptcy Choice: Dynamic Bargaining vs Liquidation

By: Samuel Antill and Steven R. Grenadier

We model a firm’s optimal capital structure decision in a framework in which it may later choose to enter either Chapter 11 reorganization or Chapter 7 liquidation. Creditors anticipate equityholders’ ex-post reorganization incentives and price them into the ex-ante...  View Details

Keywords: Default; Dynamic Bargaining; Capital Structure; Insolvency and Bankruptcy; Mathematical Methods

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Antill, Samuel, and Steven R. Grenadier. "Optimal Capital Structure and Bankruptcy Choice: Dynamic Bargaining vs Liquidation." Journal of Financial Economics 133, no. 1 (July 2019): 198–224.

• 2021
• Working Paper

Consumer Inertia and Market Power

By: Alexander MacKay and Marc Remer

We study the pricing decision of firms in the presence of consumer inertia. Inertia, which can arise from habit formation, brand loyalty, and switching costs, generates dynamic pricing incentives. These incentives mediate the impact of competition on market power in...  View Details

Keywords: Consumer Inertia; Market Power; Dynamic Competition; Demand Estimation; Consumer Behavior; Markets; Performance; Competition; Price

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MacKay, Alexander, and Marc Remer. "Consumer Inertia and Market Power." Harvard Business School Working Paper, No. 19-111, April 2019. (Revised October 2021. Direct download.)

• 2019
• Working Paper

Managerial Quality and Productivity Dynamics

By: Achyuta Adhvaryu, Anant Nyshadham and Jorge Tamayo

Which managerial skills, traits, and practices matter most for productivity? How does the observability of these features affect how appropriately they are priced into wages? Combining two years of daily, line-level production data from a large Indian garment firm with...  View Details

Keywords: Learning-by-doing; Screening; Productivity; Non-cognitive Skills; Ready-made-garments; Management; Quality; Management Skills; Management Practices and Processes; Performance Productivity; Training; Compensation and Benefits; Apparel and Accessories Industry; India

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Adhvaryu, Achyuta, Anant Nyshadham, and Jorge Tamayo. "Managerial Quality and Productivity Dynamics." Harvard Business School Working Paper, No. 19-100, March 2019.

• November–December 2018
• Article

Online Network Revenue Management Using Thompson Sampling

By: Kris J. Ferreira, David Simchi-Levi and He Wang

We consider a network revenue management problem where an online retailer aims to maximize revenue from multiple products with limited inventory constraints. As common in practice, the retailer does not know the consumer's purchase probability at each price and must...  View Details

Keywords: Online Marketing; Revenue Management; Revenue; Management; Marketing; Internet; Price; Mathematical Methods

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Ferreira, Kris J., David Simchi-Levi, and He Wang. "Online Network Revenue Management Using Thompson Sampling." Operations Research 66, no. 6 (November–December 2018): 1586–1602.