First Look

Publications

Abstract—Intercollegiate athletics in the United States have become a multibillion-dollar industry over the past several decades. In this study, we investigate the short- and long-term direct monetary effects of operating a winning athletics program for an academic institution of higher education. We construct a unique panel dataset from multiple sources and utilize the latest dynamic panel data estimation methods to account for heterogeneity while also addressing endogeneity concerns. We find that success in men's football and basketball has a significant impact on a school's respective football and basketball revenues; however, the effect is different based on the type of school. We find that regular season wins in football account for most of the increase in revenue for established schools whereas invitations to prestigious postseason bowl games play a big part for less-established schools. Furthermore, we find that student population and education quality dissipate the effect of athletic success on monetary payoffs. We find that success in basketball carries over more from the past than in football with additional contemporaneous marginal effects for established schools. We do find, however, that past athletic success carries over significantly to the present in both football and basketball, suggesting the significance of the long-term monetary effect of athletic success to many academic institutions in the United States.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49494

Abstract—U.S. money market mutual funds (MMFs) are an important source of dollar funding for global financial institutions, particularly those headquartered outside the United States. MMFs proved to be a source of considerable instability during the financial crisis of 2007-2009, resulting in extraordinary government support to help stabilize the funding of global financial institutions. In light of the problems that emerged during the crisis, a number of MMF reforms have been proposed, which we analyze in this paper. We assume that the main goal of MMF reform is safeguarding global financial stability. In light of this goal, reforms should reduce the ex-ante incentives for MMFs to take excessive risk and increase the ex post resilience of MMFs to system-wide runs. Our analysis suggests that requiring MMFs to have subordinated capital buffers could generate significant financial stability benefits. Subordinated capital provides MMFs with loss absorption capacity, lowering the probability that an MMF suffers losses large enough to trigger a run and reduces incentives to take excessive risks. Other reform alternatives based on market forces, such as converting MMFs to a floating NAV, may be less effective in protecting financial stability. Our analysis sheds light on the fundamental tensions inherent in regulating the shadow banking system.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49510

Abstract—Many of the scandalous organizational practices that have come to light in the last decade-rigging LIBOR, misselling payment protection insurance, rampant Wall Street insider trading, large-scale bribery of foreign officials, and the packaging and sale of toxic securities to naïve investors-require ethically problematic judgments and behaviors. However, dominant models of workplace unethical behavior fail to account for what we have learned from moral psychology and cognitive neuroscience in the past two decades about how and why people make the moral decisions they do. In this review, we explain how intuition, affect, physiology, and identity support and inform more deliberative reasoning process in the construction and enactment of moral behavior. We then describe how these processes play into how individuals approach a potential moral choice, whether they have the ability in the moment to enact it, and how it is encoded in the action's aftermath, feeding back into future approaches. Throughout, we attend to the role of organizational context in influencing these processes. By reviewing this large body of research and presenting a new framework that attempts to integrate these new findings, our hope is to motivate new research about how to support more moral workplace behavior that starts from what we know now.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=48782

Working Papers

Abstract—In this paper, we study the effect of invention disclosure-through patent publication-on the market for ideas. We do so by analyzing the effects of the American Inventor's Protection Act of 1999 (AIPA), which required U.S. patent applications be published 18 months after their filing date rather than at patent grant, on the timing of licensing deals in the biomedical industry. We find that post-AIPA, U.S. patent applications are significantly more likely to be licensed before patent grant and shortly after 18-month publication. Licensing delays are reduced by about ten months, on average, after AIPA's enactment. These findings suggest a hitherto unexplored benefit of the patent system: by requiring inventions to be published through a credible, standardized, and centralized repository, it mitigates information costs for buyers and sellers and thus facilitates transactions in the market for ideas.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=45527

Abstract—Vicarious learning-a process of individual belief and behavior change that occurs through being exposed to, and making meaning of, another's experience-has long been recognized as a key driver of individual, team, and organizational success. Yet existing perspectives on this critical learning process have remained fairly limited, seeing vicarious learning as simply a one-way process of observation and imitation, facilitated by formal organizational structures and conduits. Indeed, absent in these prior approaches is a consideration of the underlying process and interpersonal dynamics that guide a vicarious learning interaction. Integrating theories of experiential learning and symbolic interactionism, I offer a theoretical account of coactive vicarious learning, capturing these co-constructed, interpersonal learning interactions between individuals at work. These interactions involve the mutual processing of another's experience, built around discourse and analysis, and I argue that they lead to not only linear growth in individuals' knowledge, but also growth in their individual and relational capacity for future learning. I discuss implications of this approach for both theories of vicarious learning, as well as the practice of learning from others' experiences in organizations.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49499

Abstract—Traditional models of operations management involve dynamic decision making assuming optimal (Bayesian) updating. However, behavioral theory suggests that individuals exhibit bias in their beliefs and decisions. We conduct both a field study and two laboratory studies to examine the phenomena in the context of health. In particular, we examine how an individual's prior experiences and the experiences of those around them alter the operational decisions that the individual makes. We draw on an exogenous announcement of negative news by the Food and Drug Administration (FDA) and explore how this affects an operational decision-production tool choice-of interventional cardiologists deciding between two types of cardiac stents. Analyzing 147,000 choices over 6 years, we find that individuals do respond to negative news by using the focal production tool less often. However, we find that both individual's own experience and others' experience alter their responses in predictable ways. Moreover, although individual and other experience act as substitutes prior to negative news, the two types of experience act as complements following the negative announcement-leading to even greater use of the same production tool. Two controlled lab studies replicate our main findings and show that behavioral biases, not rational expectations, drive the effect. Our research contributes not only to operations management research, but also to the practice of healthcare and operations more generally.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49482