Copy trading allows traders in social networks to receive information on the success of other agents in financial markets and to directly copy their trades. Internet platforms like eToro, ZuluTrade, and Tradeo have attracted millions of users in recent years. The present paper studies the implications of copy trading for the risk taking of investors. Implementing a novel experimental financial asset market, we show that providing information on the success of others leads to a significant increase in risk taking of subjects. This increase in risk taking is even larger when subjects are provided with the option to directly copy others. We conclude that copy trading leads to excessive risk taking.
Promoting contribution of content is a key challenge for platforms that support the collective creation or transfer of knowledge. We use a field experiment on a massive open online course to study the role of forum size (number of people in a forum) in the contribution of content per person. We find that larger forums elicit more contributions per person. The number of questions and other help-seeking threads posted per person was unchanged by forum size, but replies and other more conversational posts increased sharply. Most of the positive effect of size was in a subset of socially responsive subjects. The implication of social responsiveness driving our results is that the unequal distribution of contribution in online platforms is unlikely to be easily changed: if more contributions are elicited from infrequent contributors, the greatest contributors would contribute even more because there would be more to respond to.
论文原文：
Baek, J. and J. Shore (2020). "Forum Size and Content Contribution per Person: A Field Experiment." Management Science 66(12): 20.
A major result in the study of two-sided platforms is the strategic interdependence between the two sides of the same platform, leading to the implication that a platform can maximize its total profits by subsidizing one of its sides. We show that this result largely depends on assuming that at least one side of the market single-homes. As technology makes joining multiple platforms easier, we increasingly observe that participants on both sides of two-sided platforms multihome. The case of multihoming on both sides is mostly ignored in the literature on competition between two-sided platforms. We help to fill this gap by developing a model for platform competition in a differentiated setting (a Hotelling line), which is similar to other models in the literature but focuses on the case where at least some agents on each side multihome. We show that when both sides in a platform market multihome, the strategic interdependence between the two sides of the same platform will diminish or even disappear. Our analysis suggests that the common strategic advice to subsidize one side in order to maximize total profits may be limited or even incorrect when both sides multihome, which is an important caveat given the increasing prevalence of multihoming in platform markets.
论文原文：
Bakos, Y. and H. Halaburda (2020). "Platform Competition with Multihoming on Both Sides: Subsidize or Not?" Management Science 66(12): 10.
Models in which current utility depends solely on current consumption (a.k.a. time-separable preferences) are widely acknowledged to be unrealistic, especially when attempting to describe preferences over consumption rates. Alternatively, one may stipulate that instant utility also depends on a state, for example, some stock of past consumption. Escaping the gravitational pull of time separability, however, is difficult because (1) the behavioral axioms that characterize the state and the instant utility are not known, (2) how to elicit the preference parameters-most notably the initial level of the state and the decay rate-is not known, and (3) managerial applications where state dependent preferences produce interesting insights and solutions are scarce. This paper makes advances on these three fronts by proposing a novel set of axioms that characterize the satiation model, a proof of concept on how to elicit all preference parameters using consumption rates, and a mixed-integer linear formulation to solve the optimal design of experiential services under satiation. Our preferences introduce a de-satiation motive, absent in separable preferences, and we explore how to optimally manage this motive.
论文原文：
Baucells, M. and L. Zhao (2020). "Everything in Moderation: Foundations and Applications of the Satiation Model." Management Science 66(12): 20.
We explore marketplace design in the context of a business-to-business platform specializing in liquidation auctions. Even when the platform's aggregate levels of supply and demand remain fixed, we establish that the platform's ability to use its design levers to manage the availability of supply over time yields significant value. We study two such levers, each using the platform's availability of supply as a means to incentivize participation from buyers who decide strategically when/how often to participate. First, the platform's listing policy sets the ending times of incoming auctions (hence, the frequency of market clearing). Exploiting a natural experiment, we illustrate that consolidating auctions' ending times to certain weekdays increases the platform's revenues by 7.3% mainly by inducing a higher level of bidder participation. The second lever is a recommendation system that can be used to reveal information about real-time market thickness to potential bidders. The optimization of these levers highlights a novel trade-off. Namely, when the platform consolidates auctions' ending times, more bidders may participate in the marketplace (demand-side competition); but ultimately auctions for substitutable goods cannibalize one another (supply-side competition). To optimize these design decisions, we estimate a structural model that endogenizes bidders' dynamic behavior, that is, their decisions on whether/how often to participate in the marketplace and how much to bid. We find that appropriately designing a recommendation system yields an additional revenue increase (on top of the benefits obtained by optimizing the platform's listing policy) by reducing supply-side cannibalization and altering the composition of participating bidders.
论文原文：
Bimpikis, K., et al. (2020). "Managing Market Thickness in Online Business-to-Business Markets." Management Science 66(12): 41.
Combining forecasts is an established approach for improving forecast accuracy. So-called optimal weights (OWs) estimate combination weights by minimizing errors on past forecasts. Yet the most successful and common approach ignores all training data and assigns equal weights (EWs) to forecasts. We analyze this phenomenon by relating forecast combination to statistical learning theory, which decomposes forecast errors into three components: bias, variance, and irreducible error. In this framework, EWs minimize the variance component (errors resulting from estimation uncertainty) but ignore the bias component (errors from under-sensitivity to training data). OWs, in contrast, minimize the bias and ignore the variance component. Reducing one component in general increases the other. To address this trade-off between bias and variance, we first derive the expected squared error of a combination using weights between EWs and OWs (technically, OWs shrunk toward EWs) and decompose it into the three error components. We then use the components to derive the shrinkage factor between EWs and OWs that minimizes the expected error. We evaluate the approach on forecasts from the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters. For these forecasts, we first show that assumptions regarding the error distribution that are commonly used in theoretical analyses are likely to be violated in practice. We then demonstrate that our approach improves over EWs and OWs if the assumptions are met, for instance, as the result of using a standardization procedure for the training data.
论文原文：
Blanc, S. M. and T. Setzer (2020). "Bias-Variance Trade-Off and Shrinkage of Weights in Forecast Combination." Management Science 66(12): 19.
Performance of investment products managed by firms in which PhDs play a key role is superior to the performance of products managed by otherwise similar firms. This relation is not a result of endogenous matching between firms and PhDs. Performance is related to training (the field of study) because economics or finance PhDs outperform other PhDs. Performance is also related to talent because PhDs who published in top outlets outperform other PhDs. Field-specific training is not relevant among the most talented PhDs because the performance gap between economics or finance PhDs and other PhDs disappears among published PhDs.
论文原文：
Chaudhuri, R., et al. (2020). "A Tangled Tale of Training and Talent: PhDs in Institutional Asset Management." Management Science 66(12): 26.
Current regulations on e-cigarettes are minimal compared with cigarette regulations, despite their growing popularity globally. Advocates of e-cigarettes claim that they aid in ceasing smoking habits. However, leaving e-cigarettes unregulated has raised growing health concerns. Policymakers in several countries, including the United States and those in Europe, are considering and experimenting with policy interventions. To evaluate current policies and implement potential regulations on e-cigarettes, policy makers must understand the impact of e-cigarettes on consumers' smoking behaviors. To address this issue, we construct a dynamic structural model that incorporates consumers' purchases and consumption behaviors of both cigarettes and e-cigarettes. The results from our proposed model indicate that consumption of e-cigarettes promotes, rather than counteracts, smoking. This is because the less costly e-cigarettes incentivize consumers to build their addiction to nicotine, which, in return, increases future consumption of both cigarettes and e-cigarettes. This finding calls for regulations on e-cigarettes. We then conduct counterfactual analyses to evaluate two policy regulations on e-cigarettes: (1) e-cigarette taxes and (2) price regulation. Because both of these policies have been discussed extensively in both the United States and many countries in the European Union, results of our policy simulations address these policy debates. We find that both are effective in reducing overall consumption of cigarettes and e-cigarettes. We also examine the role of consumers' heterogeneity on the simulation results as well as the policy implications. We conclude with future research directions, such as inclusion of social influence and cross-selling marketing.
论文原文：
Chen, J. L. and V. R. Rao (2020). "A Dynamic Model of Rational Addiction with Stockpiling and Learning: An Empirical Examination of E-cigarettes." Management Science 66(12): 21.
We integrate the results of a social network survey and a forecast information sharing experiment to examine the roles of trust and trustworthiness in impacting highranking executives' decisions in supply chain interactions. The members of our executive sample have, on average, 17 years of work experience. A significant portion of them holds positions at the C-level in world-leading organizations that span a wide range of industries. By examining the roles of trust and trustworthiness in the decision making of high-ranking executives, we find strong external validation for as well as demonstrate how these nonpecuniary, behavioral factors impact the outcomes of business interactions. We employ a multimethod research design that allows us to investigate the extent to which the executives' trust beliefs toward a relevant network of exchange partners (which we define as their "network trust") impact their trust behaviors when engaging in business interactions with members of this network. We determine the conditions pertaining to the executives' professional experiences that strengthen or weaken the impact of network trust on the executives' trust behaviors in supply chain interactions. For example, executives with more diverse professional experiences rely more on network trust to shape their trust behaviors. Conversely, executives with prior positive trust experiences rely less on network trust in their trusting behaviors. We quantify that improved trust and trustworthiness can yield up to 41%, 6%, and 5% gain in the expected profit of the supplier, the retailer, and the supply chain. Our results offer tangible implications for how organizations can better leverage executives' knowledge about how much to rely on network trust in business interactions to achieve better outcomes.
论文原文：
Choi, E. W., et al. (2020). "Network Trust and Trust Behaviors Among Executives in Supply Chain Interactions." Management Science 66(12): 28.
This paper tests whether home bias exists among information producers. We find that credit analysts are more generous when rating issuers from their home states compared with (a) benchmark analysts from outside the state and (b) their own standards for rating issuers from other states. This home analyst effect strengthens around key rating certifications (AAA and investment grade), reduces credit spreads, and expands affected issuers' debt capacity. We conduct several tests to address the possibility that the observed home analyst effect reflects a selection effect based on informational advantages and conclude that it instead reflects a home bias.
论文原文：
Cornaggia, J. N., et al. (2020). "Where the Heart Is: Information Production and the Home Bias." Management Science 66(12): 27.
We develop a conceptually grounded approach, based on the International Accounting Standards Board's conceptual framework, to the accounting for the rights and obligations embodied in a cap-and-trade program. Under this approach, firms recognize allowances as intangible assets, initially measured at fair value with a credit to cash for purchased allowances and to a current period gain for allocated allowances; firms recognize current period expense and accrue liabilities, at fair value, as they emit; both asset and liability are remeasured at fair value at every reporting date. We apply our treatment and three alternative treatments, based on current practice and proposals considered by standard setters, to transaction-level data from the U.S. sulfur dioxide cap-and-trade program to calculate as-if financial statement outcomes using actual data. The alternative treatments result in noncomparable accounting for otherwise similar arrangements. To provide ex ante evidence on the effects of noncomparable accounting, we analyze reporting outcomes and show that alternative accounting treatments of the same arrangement result in meaningful differences in reported assets and liabilities, income volatility, and commonly used performance and leverage metrics. Because the financial reporting effects of noncomparable accounting are exacerbated by business combinations and plant-level purchases of allocated allowances that may have been initially recorded at zero, our analysis explicitly accounts for the effects of these transactions. Finally, we find that among the four accounting treatments we consider, reporting outcomes under our proposed approach are most aligned with investor perceptions, as indicated by the associations between the market value of equity and assets, liabilities, and income.
论文原文：
Ertimur, Y., et al. (2020). "Financial Reporting for Pollution Reduction Programs." Management Science 66(12): 28.
How does market competition affect pay inequality between and within firms? Using division managers as a pool of similar workers and the Canada-U.S. Free Trade Agreement, we find that greater competition increases overall pay inequality between, but not within, firms. This null effect within firms is not driven by a lack of statistical power. Instead, we find that it arises primarily within subsamples of firms with higher predicted levels of social comparison. Increased competition leads to greater pay-performance sensitivity among the higher-paid managers within firms, while it leads to greater overpayment among the other managers. These patterns are consistent with firm principals offering higher-powered incentives to their best managers and overpaying the rest. Altogether, this study suggests that, while competition leads to greater pay inequality overall, principals aim to maintain equality within firms and do so through the differential provision of incentives among employees.
论文原文：
Gartenberg, C. and J. Wulf (2020). "Competition and Pay Inequality Within and Between Firms." Management Science 66(12): 20.
Classifying mandatory 13F stockholding filings by manager type reveals that hedge fund strategies are mostly contrarian, and mutual fund strategies are largely trend following. The only institutional performers-the two thirds of hedge fund managers that are contrarian-earn alpha of 2.4% per year. Contrarian hedge fund managers tend to trade profitably with all other manager types, especially when purchasing stocks from momentum oriented hedge and mutual fund managers. Superior contrarian hedge fund performance exhibits persistence and stems from stock-picking ability rather than liquidity provision. Aggregate short sales further support these conclusions about the style and skill of various fund manager types.
论文原文：
Grinblatt, M., et al. (2020). "Style and Skill: Hedge Funds, Mutual Funds, and Momentum." Management Science 66(12): 28.
Collusion is widely condemned for its negative effects on consumer welfare and market efficiency. In this paper, I show that collusion may also in some cases facilitate the creation of unexpected new sources of value. I bring this possibility into focus through the lens of a historical episode from the 19th century, when colluding railroads in the U.S. South converted 13,000 miles of railroad track to standard gauge over the course of two days in 1886, integrating the South into the national transportation network. Route-level freight traffic data reveal that the gauge change caused a large shift in market share from steamships to railroads, but did not affect total shipments or prices on these routes. Guided by these results, I develop a model of compatibility choice in a collusive market and argue that collusion may have enabled the gauge change to take place as it did, while also tempering the effects on prices and total shipments.
论文原文：
Gross, D. P. (2020). "Collusive Investments in Technological Compatibility: Lessons from US Railroads in the Late 19th Century." Management Science 66(12): 19.
Frequently, policy makers seek to roll out an intervention previously proven effective in a research study, perhaps subject to resource constraints. However, because different subpopulations may respond differently to the same treatment, there is no a priori guarantee that the intervention will be as effective in the targeted population as it was in the study. How then should policy makers target individuals to maximize intervention effectiveness? We propose a novel robust optimization approach that leverages evidence typically available in a published study. Our model can be easily optimized in minutes for realistic instances with off-the-shelf software and is flexible enough to accommodate a variety of resource and fairness constraints. We compare our approach with current practice by proving performance guarantees for both approaches, which emphasize their structural differences. We also prove an intuitive interpretation of our model in terms of regularization, penalizing differences in the demographic distribution between targeted individuals and the study population. Although the precise penalty depends on the choice of uncertainty set, we show that for special cases we can recover classical penalties from the covariate matching literature on causal inference. Finally, using real data from a large teaching hospital, we compare our approach to common practice in the particular context of reducing emergency department utilization by Medicaid patients through case management. We find that our approach can offer significant benefits over common practice, particularly when the heterogeneity in patient response to the treatment is large.
We draw on the skewness literature to propose regression-based performance evaluation tests designed for investments with option-like returns. These tests deliver conclusions valid for all risk-averse mean-variance-skewness investors and can better account for nonlinearities in returns than option-based factor models. Applied to mutual and hedge funds, our tests usually suggest selecting different funds than standard tests and find that a significant fraction (11%) of hedge funds adds value to investors, whereas this is an insignificant 4% for mutual funds. We also analyze the economic significance of these option-like returns and their out-of-sample persistence.
论文原文：
Karehnke, P. and F. de Roon (2020). "Spanning Tests for Assets with Option-Like Payoffs: The Case of Hedge Funds." Management Science 66(12): 22.
Based on a simulation, the authors of "Newsvendor Demand Chasing Revisited" recommended using correlation of orders with lagged demand to measure chasing behavior. They concluded that measuring chasing with regression based on partial adjustment is prone to false positives. We show the purported false positives are due to autocorrelation and recommend using partial adjustment regression-based approaches to evaluate chasing.
论文原文：
Kirshner, S. N. and B. B. Moritz (2020). "Comment on "Newsvendor Demand Chasing Revisited"." Management Science 66(12): 4.
We study supply chains where multiple suppliers sell to multiple retailers through a wholesale market. In practice, we often observe that both suppliers and retailers tend to influence the wholesale market price that retailers pay to suppliers. However, existing models of supply chain competition do not capture retailers' influence on the wholesale price (i.e., buyer power) and show that the wholesale price and the order quantity per retailer do not change with the number of retailers. To overcome this limitation, we develop a competition model based on the market game mechanism in which the wholesale price is determined based on both suppliers' and retailers' decisions. When taking into account retailers' buyer power, we obtain the result that is consistent with the observed practice: As the number of retailers increases, each retailer's buyer power decreases, and each retailer is willing to pay more for her order, so the wholesale price increases. In this case, supply chain expansion to include more retailers (or suppliers) turns out to be more beneficial in terms of supply chain efficiency than what the prior literature shows without considering buyer power. Finally, we analyze the integration of two local supply chains and show that although the profit of the integrated supply chain is greater than the sum of total profits of local supply chains, integration may reduce the total profit of firms in a retailer-oriented supply chain that has more retailers than suppliers.
论文原文：
Korpeoglu, C. G., et al. (2020). "Supply Chain Competition: A Market Game Approach." Management Science 66(12): 18.
This paper provides evidence of ratings shopping in the corporate bond market. By estimating systematic differences in agencies' biases about any given firm's bonds, I show that new bonds are more likely to be rated by agencies that are positively biased toward the firm-a pattern that is strongest among bonds that have only one rating. The paper also shows that issuers often delay less favorable ratings until after a bond is sold. Consistent with theoretical models of ratings shopping, these effects are strongest among more complex bonds that are more difficult to rate. Bonds with upward-biased ratings are more likely to be downgraded and default, but investors account for this bias and demand higher yields when buying these bonds.
论文原文：
Kronlund, M. (2020). "Do Bond Issuers Shop for Favorable Credit Ratings?" Management Science 66(12): 26.
This paper provides evidence on the determinants and economic outcomes of updates of accounting systems (AS) over a 24-year timespan in a large sample of U.S. hospitals. We provide evidence that hospitals update their AS in response to three types of pressures: economic pressures, such as increases in the quality of accounting information driven by vendor rollouts of improved AS; coercive pressures imposed by regulators mandating certain practices, such as internal control practices imposed by Sarbanes-Oxley Section 404; and mimetic pressures for hospitals to conform their AS to those of their peers, such as local county and prominent "celebrity" peers. We find that only economically driven updates lead to economic benefits in the form of lower operating expenses and higher revenues. In contrast, we find some evidence that AS updates prompted by coercive regulatory pressures actually impose economic costs in the form of higher operating expenses.
论文原文：
Labro, E. and L. Stice-Lawrence (2020). "Updating Accounting Systems: Longitudinal Evidence from the Healthcare Sector." Management Science 66(12): 21.
This article investigates the effect of patent protection on the mobility of early career employee-inventors. Using data on patent applications filed at the U.S. Patent and Trademark Office between 2001 and 2012 and examiner leniency as a source of exogenous variation in patent protection, we find that one additional patent granted decreases the likelihood of changing employers, on average, by 23%. This decrease is stronger when the employee has fewer coinventors, works outside the core of the firm, and produces more basic-research innovations. These findings are consistent with the idea that patents turn innovation-related skills into patent-holder-specific human capital.
论文原文：
Melero, E., et al. (2020). "The Effect of Patent Protection on Inventor Mobility." Management Science 66(12): 21.
We study the pricing and return policy decisions of an omnichannel retailer serving customers who differ in how they realize their uncertain valuation for a product-by inspecting in store before purchase or by purchasing online and possibly returning misfit products. Customers may return misfit products either to stores for a full refund or online as per the firm's return policy. We model prices to be identical across channels, allow crosschannel returns, and endogenize customers' purchase and return decisions, capturing typical features of an omnichannel setting. Our analysis helps explain why some omnichannel firms choose full refunds, whereas others charge a fee for online returns. We find that omnichannel firms with good salvage partners for online returns (e.g., Nordstrom) as well as those with more store-based customers (e.g., Macy's) should offer full refunds. Similarly, firms are incentivized to offer full refunds for products that customers are more likely to inspect in store (e.g., Express for footwear). In contrast, firms with a significant store network and better in-store salvage opportunities (e.g., J.C. Penney) might be better off charging a fee for online returns in order to nudge customers to return in store. Finally, an omnichannel firm should be cautious both in making the return process more convenient and in improving accessibility to its stores, because these seemingly beneficial policies, if combined with a partial-refund policy, could undermine the firm's overall profit.
