Richard Zeckhauser
Biographic Data
| ID | 702671 |
|---|---|
| NAME | Richard Zeckhauser |
| GIVEN NAMES | Richard |
| FAMILY NAME | Zeckhauser |
| SIGNATURE | ZECKHAUSER R |
| AFFILIATIONS | Harvard University |
| ORCID | 0000-0002-4222-9546 |
| VERIFIED | Yes |
| TOTAL WORKS | 55 |
| TOTAL CITATIONS | 176 |
| AUTHOR COUNT | 55 |
| EDITOR COUNT | 0 |
| FIRST PUBLICATION YEAR | 1966 |
| LATEST PUBLICATION YEAR | 2024 |
| H-INDEX | 8 |
Strategy Is Only Partly an Illusion: “Relative Foresight” as an Objective Standard for Evaluating Foreign Policy Competence
Foreign policymakers must grapple with complexity, uncertainty, and subjectivity. These challenges raise the possibility that “strategy is an illusion”: that there is no reliable method for assessing skill at managing international politics. By contrast, we show that researchers can objectively evaluate a critical component of foreign policy competence using a standard we call “relative foresight,” defined as decision-makers’ ability to anticipat…
Strategic sorting: The role of ordeals in health care
Ordeals are burdens placed on individuals that yield no benefits to others; hence they represent a dead-weight loss. Ordeals – the most common is waiting time – play a prominent role in rationing health care. The recipients most willing to bear them are those receiving the greatest benefit from scarce health-care resources. Health care is heavily subsidized; hence, moral hazard leads to excess use. Ordeals are intended to discourage expenditures …
Sunlight and Protection Against Influenza
Thunder Versus Lightning: A Performance and Cost Analysis of the A-10 “Warthog” Versus the F-35 Joint Strike Fighter
For decades, the U.S. Air Force has contemplated replacing the A-10 Thunderbolt II “Warthog” with a newer fighter aircraft. However, a quantitative analysis comparing the Warthog’s performance and costs with those of its intended replacement, the F-35 Lightning II Joint Strike Fighter, shows that retiring the Warthog would be operationally unsound and fiscally imprudent. The rationale for the replacement is that it would increase airpower capabil…
Bound to Happen: Explanation Bias in Historical Analysis
This paper argues that historical analysis, necessarily written with hindsight, often underestimates the uncertainties of the past. We call this tendency explanation bias. This bias leads individuals—including professional historians—to imply greater certainty in causal analyses than the evidence justifies. Their analyses will treat what is plausible to be probable. We offer a few intuitions about why explanation bias exists, its relation to othe…
Enrolee outcomes after health insurance plan terminations: A diagnosis of default effects
Behavioural economic research has established that defaults, one form of nudge, powerfully influence choices. In most policy contexts, all individuals receive the same nudge. We present a model that analyses the optimal universal nudge for a situation in which individuals differ in their preferences and hence should make different choices and may incur a cost for resisting a nudge. Our empirical focus is on terminated choosers (TCs), individuals …
Analytic Confidence and Political Decision‐Making: Theoretical Principles and Experimental Evidence From National Security Professionals
When making decisions under uncertainty, it is important to distinguish between the probability that a judgment is true and the confidence analysts possess in drawing their conclusions. Yet analysts and decision‐makers often struggle to define “confidence” in this context, and many ways that scholars use this term do not necessarily facilitate decision‐making under uncertainty. To help resolve this confusion, we argue for disaggregating analytic …
The Value of Precision in Probability Assessment: Evidence from a Large-Scale Geopolitical Forecasting Tournament
Scholars, practitioners, and pundits often leave their assessments of uncertainty vague when debating foreign policy, arguing that clearer probability estimates would provide arbitrary detail instead of useful insight. We provide the first systematic test of this claim using a data set containing 888,328 geopolitical forecasts. We find that coarsening numeric probability assessments in a manner consistent with common qualitative expressions—inclu…
Behavioral Consequences of Probabilistic Precision: Experimental Evidence from National Security Professionals
National security is one of many fields where experts make vague probability assessments when evaluating high-stakes decisions. This practice has always been controversial, and it is often justified on the grounds that making probability assessments too precise could bias analysts or decision makers. Yet these claims have rarely been submitted to rigorous testing. In this paper, we specify behavioral concerns about probabilistic precision into fa…
Artful paltering: The risks and rewards of using truthful statements to mislead others
Paltering is the active use of truthful statements to convey a misleading impression. Across 2 pilot studies and 6 experiments, we identify paltering as a distinct form of deception. Paltering differs from lying by omission (the passive omission of relevant information) and lying by commission (the active use of false statements). Our findings reveal that paltering is common in negotiations and that many negotiators prefer to palter than to lie b…
The anatomy of ignorance
Ignorance represents a situation in which some potential outcomes are not even identified. Often they are both unknown and unknowable. On a continuum that begins with risk and progresses through uncertainty, ignorance is the third, final, and most extreme state in the sequence. “The anatomy of ignorance,” introduces a medical metaphor. Analysis diagnoses ignorance as a malady that inflicts significant damages at the individual and societal levels…
Grappling with Ignorance: Frameworks from Decision Theory, Lessons from Literature
Benefit-cost analysis (BCA), a discipline best known for guiding policy choices, can also guide personal decisions. In either application, traditional BCA tallies benefits and costs using market values or willingness to pay. When future outcomes are uncertain, as they are across a wide array of situations, BCA must call as well on the methods of decision analysis. Thus, von Neumann–Morgenstern utilities, subjective probabilities, and sequential d…
Consumerism in Health Care: Challenges and Opportunities
The era of consumerism in health care has arrived. Direct-to-consumer advertising of pharmaceuticals, health newsletters from leading hospitals and medical schools, and, most importantly, the near-ubiquity of the Internet have made it easy for consumers to obtain information about their medical conditions and possible treatments. This presents health care providers and patients with both challenges and opportunities
Collaborative Governance: Private Roles for Public Goals in Turbulent Times
How government can forge dynamic public-private partnerships All too often government lacks the skill, the will, and the wallet to meet its missions. Schools fall short of the mark while roads and bridges fall into disrepair. Health care costs too much and delivers too little. Budgets bleed red ink as the cost of services citizens want outstrips the taxes they are willing to pay. Collaborative Governance is the first book to offer solutions by de…
The online laboratory: Conducting experiments in a real labor market
Online labor markets have great potential as platforms for conducting experiments. They provide immediate access to a large and diverse subject pool, and allow researchers to control the experimental context. Online experiments, we show, can be just as valid—both internally and externally—as laboratory and field experiments, while often requiring far less money and time to design and conduct. To demonstrate their value, we use an online labor mar…
The Patron’s Payoff: Conspicuous Commissions in Italian Renaissance Art
Nelson, Jonathan K. and Richard J. Zeckhauser. The Patron’s Payoff: Conspicuous Commissions in Italian Renaissance Art. An article from journal Renaissance and Reformation / Renaissance et Réforme (Volume 33, Number 4, Fall 2010, pp. 3-151), on Érudit
The methodology of normative policy analysis
Policy analyses frequently clash. Their disagreements stem from many sources, including models, empirical estimates, and values such as who should have standing and how different criteria should be weighted. We provide a simple taxonomy of disagreement, identifying distinct categories within both the positive and values domains of normative policy analysis. Using disagreements in climate policy to illustrate, we demonstrate how illuminating the s…
Investing in the Unknown and Unknowable
From David Ricardo making a fortune buying British government bonds on the eve of the Battle of Waterloo to Warren Buffett selling insurance to the California earthquake authority, the wisest investors have earned extraordinary returns by investing in the unknown and the unknowable (UU). But they have done so on a reasoned, sensible basis. This essay explains some of the central principles that such investors employ. It starts by discussing “igno…
The Global Challenge of Antimicrobial Resistance: Insights from Economic Analysis
The prevalence of antimicrobial resistance (AR) limits the therapeutic options for treatment of infections, and increases the social benefit from disease prevention. Like an environmental resource, antimicrobials require stewardship. The effectiveness of an antimicrobial agent is a global public good. We argue for greater use of economic analysis as an input to policy discussion about AR, including for understanding the incentives underlying heal…
Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics and Manumissions 1800-1860
Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States
Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in six countries (Brazil, China, Oman, Switzerland, Turkey, and the United States) confronted a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their “minimum acceptable probability” (MAP) for securing the high payof…
Regulation by generalization
Both criminal and regulatory laws have traditionally been skeptical of what Jeremy Bentham referred to as evidentiary offenses – the prohibition (or regulation) of some activity not because it is wrong, but because it probabilistically (but not universally) indicates that a real wrong has occurred. From Bentham to the present, courts and theorists have worried about this form of regulation, believing that certainly in the criminal law context, bu…
Antibiotic resistance as a global threat: Evidence from China, Kuwait and the United States
BACKGROUND: Antimicrobial resistance is an under-appreciated threat to public health in nations around the globe. With globalization booming, it is important to understand international patterns of resistance. If countries already experience similar patterns of resistance, it may be too late to worry about international spread. If large countries or groups of countries that are likely to leap ahead in their integration with the rest of the world-…
Investing in the Unknown and Unknowable
From David Ricardo making a fortune buying British government bonds on the eve of the Battle of Waterloo to Warren Buffett selling insurance to the California earthquake authority, the wisest investors have earned extraordinary returns by investing in the unknown and the unknowable (UU). But they have done so on a reasoned, sensible basis. This essay explains some of the central principles that such investors employ. It starts by discussing ``ign…
Aggregation of Heterogeneous Time Preferences
We examine an economy whose consumers have different discount factors for utility, possibly not exponential. We characterize the properties of efficient allocations of resources and of the shadow prices that would decentralize such allocations. We show in particular that the representative agent has a decreasing discount rate when, as is usually posited, all of a group's members have a constant discount rate and decreasing absolute risk aversion …
Congressional Vote Options
Numerous accounts reveal that congressional leaders often secure “hip‐pocket votes” or “if you need me” pledges from rank‐and‐file legislators. These are essentially options on votes. Leaders exercise sufficient options—pay legislators to convert to favorable votes—when those options will yield victory. Otherwise, they release the options. A model shows that this optimal strategy for leaders produces many small victories, few small losses, and lo…
The Efficient Allocation of Individuals to Positions
In a variety of contexts, individuals must be allocated to positions with limited capacities. Legislators must be assigned to committees, college students to dormitories, and urban homesteaders to dwellings. (A general class of fair division problems would have the positions represent goods.) This paper examines the general problem of achieving efficient allocations when individuals' preferences are unknown and where (as with a growing number of …
Racial Profiling
I.1. Although, or perhaps because, racial profiling is a matter of great concern in the United States and elsewhere, there is little philosophical reflection on this subject.11 There are exceptions: There is a debate started by Michael Levin, “Responses to Race Differences in Crime,”Journal of Social Philosophy 23 (1992): 5–29, and Laurence Thomas, “Statistical Badness,”Journal of Social Philosophy 23 (1992): 30–41, which includes Jonathan Adler,…
Behavioral Consequences of Probabilistic Precision: Experimental Evidence from National Security Professionals
National security is one of many fields where experts make vague probability assessments when evaluating high-stakes decisions. This practice has always been controversial, and it is often justified on the grounds that making probability assessments too precise could bias analysts or decision makers. Yet these claims have rarely been submitted to rigorous testing. In this paper, we specify behavioral concerns about probabilistic precision into fa…
Willingness to Pay and the Distribution of Risk and Wealth
Willingness-to-pay is an appropriate benefits metric for government expenditure and regulatory policies that reduce risks to human life. It depends, however, on the distribution of risk and wealth. Currently, society's expenditures overemphasize concentrated risks, say after-the-fact treatment as opposed to prevention. A 'dead-anyway' effect complements excess attention to intense interests in explaining this. The normative criterion for spending…
Voting Systems, Honest Preferences and Pareto Optimality
The market is a decentralized system that can bring about efficient economic decisions. This paper examines whether social choice mechanisms can duplicate this success in the political arena. The famed Arrow result tells us centralized systems cannot achieve efficient, nondictatorial outcomes unless they rely on cardinal preferences. With decentralization, efficiency comes to require something more: the truthful revelation of preferences. Schemes…
The Dilemma of Government Responsiveness
The expectation that the government will respond to future circumstances, say bailing out a dictator to avoid a bloodbath, or raising taxes on immovable capital investments, often hinders the establishment of appropriate incentives for efficient behavior. The government's dilemma, simply, is that it may be unable to commit future governments not to be responsive. Contracts and constitutional provisions are mechanisms to limit responsiveness. So t…
The Value of Precision in Probability Assessment: Evidence from a Large-Scale Geopolitical Forecasting Tournament
Scholars, practitioners, and pundits often leave their assessments of uncertainty vague when debating foreign policy, arguing that clearer probability estimates would provide arbitrary detail instead of useful insight. We provide the first systematic test of this claim using a data set containing 888,328 geopolitical forecasts. We find that coarsening numeric probability assessments in a manner consistent with common qualitative expressions—inclu…
The methodology of normative policy analysis
Policy analyses frequently clash. Their disagreements stem from many sources, including models, empirical estimates, and values such as who should have standing and how different criteria should be weighted. We provide a simple taxonomy of disagreement, identifying distinct categories within both the positive and values domains of normative policy analysis. Using disagreements in climate policy to illustrate, we demonstrate how illuminating the s…
Aggregation of Heterogeneous Time Preferences
We examine an economy whose consumers have different discount factors for utility, possibly not exponential. We characterize the properties of efficient allocations of resources and of the shadow prices that would decentralize such allocations. We show in particular that the representative agent has a decreasing discount rate when, as is usually posited, all of a group's members have a constant discount rate and decreasing absolute risk aversion …
Distinguished Fellow: Reflections on Thomas Schelling
Thomas Crombie Schelling thinks about the essence of phenomena. He distills such essences and demonstrates their presence in many important social phenomena. We shall chronicle three stages of his life, designated by the titles of his books: The Strategy of Conflict (1960); Micromotives and Macrobehavior (1978); and Choice and Consequence (1984
Artful paltering: The risks and rewards of using truthful statements to mislead others
Paltering is the active use of truthful statements to convey a misleading impression. Across 2 pilot studies and 6 experiments, we identify paltering as a distinct form of deception. Paltering differs from lying by omission (the passive omission of relevant information) and lying by commission (the active use of false statements). Our findings reveal that paltering is common in negotiations and that many negotiators prefer to palter than to lie b…
Analytic Confidence and Political Decision‐Making: Theoretical Principles and Experimental Evidence From National Security Professionals
When making decisions under uncertainty, it is important to distinguish between the probability that a judgment is true and the confidence analysts possess in drawing their conclusions. Yet analysts and decision‐makers often struggle to define “confidence” in this context, and many ways that scholars use this term do not necessarily facilitate decision‐making under uncertainty. To help resolve this confusion, we argue for disaggregating analytic …
Hazard Communication: Warnings and Risk
Risk information can alter risk judgments and promote sound risk decisions. Hazard warnings are critical in providing such information. Both right-to-know and duty-to-warn obligations reflect this. Evidence suggests that warnings can significantly affect risk-taking decisions, but care is needed in interpreting whether their influence leads to successful outcomes. Hazard warnings must accommodate individuals' cognitive limitations. Salient proble…
Investing in the Unknown and Unknowable
From David Ricardo making a fortune buying British government bonds on the eve of the Battle of Waterloo to Warren Buffett selling insurance to the California earthquake authority, the wisest investors have earned extraordinary returns by investing in the unknown and the unknowable (UU). But they have done so on a reasoned, sensible basis. This essay explains some of the central principles that such investors employ. It starts by discussing ``ign…
The Risk Management Dilemma
Market processes play a central and constructive role in allocating risks, but impediments such as inaccurately perceived risks and externalities create a potential role for government intervention. Individuals overestimate small risks, are averse to imprecisely understood risks, and give excessive weight to errors of commission over errors of omission. The challenge for the government is to strike an appropriate balance in its risk regulation ef…
Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics, and Manumissions, 1800-1860
This book provides the first comprehensive and consistent analysis of vital statistics and migration patterns for the United States between the Revolution and the Civil War. It is anchored in the one available source for nationwide estimates the decennial censuses. It attempts to provide for black and white populations a consistent set of estimates of birth and death rates rates of natural increase and net international and interregional flows. F…
Inferences from Alarming Events
An extreme event, such as a nuclear accident, an earthquake, a cluster of adverse reactions to a particular drug, or excessive breakdowns of some class of equipment, frequently focuses attention for the first time on an important issue. By then, however, data on the incidence and magnitudes of relevant past events may be unavailable or too costly to reconstruct. Using a simple probability model, we derive methods for drawing statistical inference…
Bound to Happen: Explanation Bias in Historical Analysis
This paper argues that historical analysis, necessarily written with hindsight, often underestimates the uncertainties of the past. We call this tendency explanation bias. This bias leads individuals—including professional historians—to imply greater certainty in causal analyses than the evidence justifies. Their analyses will treat what is plausible to be probable. We offer a few intuitions about why explanation bias exists, its relation to othe…
Grappling with Ignorance: Frameworks from Decision Theory, Lessons from Literature
Benefit-cost analysis (BCA), a discipline best known for guiding policy choices, can also guide personal decisions. In either application, traditional BCA tallies benefits and costs using market values or willingness to pay. When future outcomes are uncertain, as they are across a wide array of situations, BCA must call as well on the methods of decision analysis. Thus, von Neumann–Morgenstern utilities, subjective probabilities, and sequential d…
Regulation by generalization
Both criminal and regulatory laws have traditionally been skeptical of what Jeremy Bentham referred to as evidentiary offenses – the prohibition (or regulation) of some activity not because it is wrong, but because it probabilistically (but not universally) indicates that a real wrong has occurred. From Bentham to the present, courts and theorists have worried about this form of regulation, believing that certainly in the criminal law context, bu…
Advertising and Entry: The Case of Physician Services
This paper examines the entry implications of physician advertising. Evidence suggests that advertising inhibited entry into this market. Nevertheless, experienced physicians (incumbents), to whom advertising would offer the greatest financial benefit, in fact advertise less--a paradox that may be explained by nonfinancial concerns, such as unwillingness to break well-internalized professional norms against advertising. Physician advertising has …
An Economic Theory of Alliances
The report presents a new theoretical model of military alliances and other international organizations. The assumptions basic to the model are that nations act in their own best interests and that there is a 'public goods' aspect to all joint undertakings. The main conclusions drawn from the analysis are that (1) a less than optimal amount of resources will be devoted to an alliance or other international organization; (2) the burden of an allia…
Linear Regression with Non-Normal Error Terms
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. The MIT Press is collaborating with JSTOR to digitize, preserve and extend access to The Review of
A Tale of Probable Regions: A Statistical Fable
Voting Systems, Honest Preferences and Pareto Optimality
The market is a decentralized system that can bring about efficient economic decisions. This paper examines whether social choice mechanisms can duplicate this success in the political arena. The famed Arrow result tells us centralized systems cannot achieve efficient, nondictatorial outcomes unless they rely on cardinal preferences. With decentralization, efficiency comes to require something more: the truthful revelation of preferences. Schemes…
Economics and health care
Insurance, Information, and Individual Action
The Efficient Allocation of Individuals to Positions
In a variety of contexts, individuals must be allocated to positions with limited capacities. Legislators must be assigned to committees, college students to dormitories, and urban homesteaders to dwellings. (A general class of fair division problems would have the positions represent goods.) This paper examines the general problem of achieving efficient allocations when individuals' preferences are unknown and where (as with a growing number of …
Inferences from Alarming Events
An extreme event, such as a nuclear accident, an earthquake, a cluster of adverse reactions to a particular drug, or excessive breakdowns of some class of equipment, frequently focuses attention for the first time on an important issue. By then, however, data on the incidence and magnitudes of relevant past events may be unavailable or too costly to reconstruct. Using a simple probability model, we derive methods for drawing statistical inference…
Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics, and Manumissions, 1800-1860
This book provides the first comprehensive and consistent analysis of vital statistics and migration patterns for the United States between the Revolution and the Civil War. It is anchored in the one available source for nationwide estimates the decennial censuses. It attempts to provide for black and white populations a consistent set of estimates of birth and death rates rates of natural increase and net international and interregional flows. F…
Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics, and Manumissions, 1800-1860
Journal Article Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics, and Manumissions, 1800–1860. By Peter D. McClelland and Richard J. Zeckhauser. (Cambridge, Eng.: Cambridge University Press, 1982. xiv + 222 pp. Map, tables, appendixes, notes, bibliography, and index. $37.50.) Get access J. William Leasure J. William Leasure San Diego State University Search for other works by this author on: Oxford Ac…
Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics, and Manumissions, 1800-1860
Demographic Dimensions of the New Republic: American Interregional Migration, Vital Statistics, and Manumissions, 1800-1860
Status quo bias in decision making
The Dilemma of Government Responsiveness
The expectation that the government will respond to future circumstances, say bailing out a dictator to avoid a bloodbath, or raising taxes on immovable capital investments, often hinders the establishment of appropriate incentives for efficient behavior. The government's dilemma, simply, is that it may be unable to commit future governments not to be responsive. Contracts and constitutional provisions are mechanisms to limit responsiveness. So t…
American Society: Public and Private Responsibilities
Distinguished Fellow: Reflections on Thomas Schelling
Thomas Crombie Schelling thinks about the essence of phenomena. He distills such essences and demonstrates their presence in many important social phenomena. We shall chronicle three stages of his life, designated by the titles of his books: The Strategy of Conflict (1960); Micromotives and Macrobehavior (1978); and Choice and Consequence (1984
Shared Price Trends: Evidence From U.S. Cities and OECD Countries
How similar is the price behavior of different commodities? Of the same commodity in different areas? Using cointegration methods, we explore the degree of shared trends among prices within and across U.S. metropolitan areas, as well as within and across Organization for Economic Cooperation and Development (OECD) countries. Within U.S. metropolitan areas, there are shared price trends among services, goods, and food, though not for rents. Across…
Advertising and Entry: The Case of Physician Services
This paper examines the entry implications of physician advertising. Evidence suggests that advertising inhibited entry into this market. Nevertheless, experienced physicians (incumbents), to whom advertising would offer the greatest financial benefit, in fact advertise less--a paradox that may be explained by nonfinancial concerns, such as unwillingness to break well-internalized professional norms against advertising. Physician advertising has …
Public Finance Principles and National Health Care Reform
Public finance principles, though usually treated as a minor consideration, lie at the heart of effective national health care reform. Four principles are discussed: charge for a service where its cost is created; distinguish rents, resources, and transfers; know what services cost and pay accordingly; balance distributional and equity concerns. The principles’ implications include: since employment does not much affect health costs, financing (p…
Willingness to Pay and the Distribution of Risk and Wealth
Willingness-to-pay is an appropriate benefits metric for government expenditure and regulatory policies that reduce risks to human life. It depends, however, on the distribution of risk and wealth. Currently, society's expenditures overemphasize concentrated risks, say after-the-fact treatment as opposed to prevention. A 'dead-anyway' effect complements excess attention to intense interests in explaining this. The normative criterion for spending…
The Risk Management Dilemma
Market processes play a central and constructive role in allocating risks, but impediments such as inaccurately perceived risks and externalities create a potential role for government intervention. Individuals overestimate small risks, are averse to imprecisely understood risks, and give excessive weight to errors of commission over errors of omission. The challenge for the government is to strike an appropriate balance in its risk regulation ef…
Hazard Communication: Warnings and Risk
Risk information can alter risk judgments and promote sound risk decisions. Hazard warnings are critical in providing such information. Both right-to-know and duty-to-warn obligations reflect this. Evidence suggests that warnings can significantly affect risk-taking decisions, but care is needed in interpreting whether their influence leads to successful outcomes. Hazard warnings must accommodate individuals' cognitive limitations. Salient proble…
The J-Shape of Performance Persistence Given Survivorship Bias
Performance may enhance survival probability. When it does, the induced lack of randomness challenges robust and unbiased inference. If survivors are sorted into two groups based on past performance, spurious persistence has been demonstrated if variance in performance is heterogeneous. However, as we show both theoretically and with simulations, if performance is categorized finely, the spurious persistence will be J-shaped; that is, at the bott…
Reputation systems
T he Internet offers vast new opportunities to interact with total strangers. These interactions can be fun, informative, even profitable. But they also involve risk. Is the advice of a self-proclaimed expert at expertcentral.com reliable? Will an unknown dotcom site or eBay seller ship items promptly with appropriate packaging? Will the product be the same one described online?
Estimating the Returns to Insider Trading: A Performance-Evaluation Perspective
This paper uses performance-evaluation methodology to estimate the returns earned by insiders when they trade their company's stock. Our methods are designed to estimate the returns earned by insiders themselves and thereby differ from the previous insider-trading literature, which focuses on the informativeness of insider trades for other investors. We find that insider purchases earn abnormal returns of more than 6% per year, and insider sales …
Economics (37 works) · Political science (23 works) · Computer Science (18 works) · Business (16 works) · Law (15 works) · Law (13 works) · Mathematics (13 works) · Microeconomics (13 works) · Psychology (13 works) · Actuarial science (12 works)