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Abstract—No abstract available.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=48729

Abstract—We present our work with an online retailer, Rue La La, as an example of how a retailer can use its wealth of data to optimize pricing decisions on a daily basis. Rue La La is in the online fashion sample sales industry, where they offer extremely limited-time discounts on designer apparel and accessories. One of the retailer's main challenges is pricing and predicting demand for products that it has never sold before, which account for the majority of sales and revenue. To tackle this challenge, we use machine learning techniques to estimate historical lost sales and predict future demand of new products. The nonparametric structure of our demand prediction model, along with the dependence of a product's demand on the price of competing products, pose new challenges on translating the demand forecasts into a pricing policy. We develop an algorithm to efficiently solve the subsequent multi-product price optimization that incorporates reference price effects, and we create and implement this algorithm into a pricing decision support tool for Rue La La's daily use. We conduct a field experiment and find that sales do not decrease due to implementing tool recommended price increases for medium and high price point products. Finally, we estimate an increase in revenue of the test group by approximately 9.7% with an associated 90% confidence interval of (2.3%, 17.8%).

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49523

Abstract—We examine the relationship between the diffusion of advanced Internet technology and the geographic concentration of invention, as measured by patents. First, we show that patenting became more concentrated from the early 1990s to the early 2000s and, similarly, that counties that were leaders in patenting in the early 1990s produced relatively more patents by the early 2000s. Second, we compare the extent of invention in counties that were leaders in Internet adoption to those that were not. We see little difference in the growth rate of patenting between leaders and laggards in Internet adoption, on average. However, we find that the rate of patent growth was faster among counties who were not leaders in patenting in the early 1990s but were leaders in Internet adoption by 2000, suggesting that the Internet helped stem the trend towards more geographic concentration. We show that these results are largely driven by patents filed by distant collaborators rather than non-collaborative patents or patents by non-distant collaborators, suggesting low cost long-distance digital communication as a potential mechanism.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49614

Abstract—Traditional risk factor models indicate that hedge funds capture pre-fee alphas of 6% to 10% per annum over the period from 1996 to 2012. At the same time, the hedge fund return series is not reliably distinguishable from the returns of mechanical S&P 500 put-writing strategies. We show that the high excess returns to hedge funds and put-writing are consistent with an equilibrium in which a small subset of investors specialize in bearing downside market risks. Required rates of return in such an equilibrium can dramatically exceed those suggested by traditional models, affecting inference about the attractiveness of these investments.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=48693

Abstract—Regional policy, especially in Europe, makes increasing reference to the notion of strategy, a conceptual tool developed in the area of business studies. This chapter reviews some key aspects of strategy as defined by the so-called “positioning school” and discusses how these ideas can be translated into the context of regions. It identifies differences between the two areas but also finds sufficient similarities for the concept of strategy to be useful for regions. The value of a more thorough reflection on the notion of strategy becomes clear when the conceptual framework is contrasted with the reality of strategies as defined by regions. We find that some important aspects of strategy, especially the notion of strategic positioning based on specific business environment qualities, are systematically missing. Regions would benefit from a closer look at the insights from businesses when developing their strategies.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49625

Abstract—Research on ethics has focused on the factors that help individuals act ethically when they are tempted to cheat. However, we know little about how best to help individuals notice unethical behaviors in others and in themselves. This paper identifies a solution: instilling a mindset of vigilance. In an experiment, individuals playing the role of financial advisers recommended one of four possible investments to their clients. Unbeknown to these advisers, one of the funds under consideration was actually a fraudulent feeder fund of Madoff Investment Securities. Results from this empirical study demonstrate that instilling vigilance by asking individuals to indicate their suspicions prior to making a decision was critical to helping them notice fraudulent behavior and act on that information. In contrast, committing to a decision prior to contemplating suspicions precluded individuals from subsequently integrating critical information about the fund’s fraudulent activity. We extend these findings to other interventions aimed at helping managers notice unethical behavior.

Publisher's link: http://www.hbs.edu/faculty/Pages/item.aspx?num=49602

Abstract—Under the prevailing ideology of "shareholder primacy" most boards of directors believe that they are prevented from considering stakeholders other than shareholders in determining material issues and materiality for strategy and reporting. New research is showing that legal foundations exist for directors to indeed consider other stakeholders. To many boards, this is new thinking. In order to assist boards in this new realm of taking into account multi-stakeholder significance, we have structured this paper in four parts and a conclusion. In Part I, we review fiduciary duty focusing on to whom this duty is owed. In Part II, we review the relevance of materiality in corporate governance. In Part III, we review our audience-focused materiality determination approach, and in Part IV, we discuss the new idea of an annual board "Statement of Significant Audiences and Materiality." We conclude with some preliminary research results, ideas for future research, and next steps.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49599

Abstract—Copyright infringement is an increasingly important challenge, leading creators to invest in methods of detection and enforcement. We study different enforcement methods using a novel dataset generated from two experiments run by a stock-photography agency. We find that a substantial reduction in the requested amount generates a small increase in settlement. In contrast, given the same reduced request, a message that informs infringers of the price reduction and acknowledges the possibility of unintentionality generates a large increase in settlement. Including a deadline further increases the response. The higher settlement rate avoids additional legal action, reducing social costs of dispute resolution.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49624

Abstract—Our research considers how inequalities in public and private spheres are affected by childhood exposure to non-traditional gender role models at home. We test the association between being raised by an employed mother and adult men’s and women’s outcomes at work and at home. Our analyses rely on national-level archival data from multiple sources and individual-level survey data collected as part of the International Social Survey Programme in 2002 and 2012 from nationally representative samples of men and women in 24 countries. Adult daughters of employed mothers are more likely to be employed, more likely to hold supervisory responsibility if employed, work more hours, and earn marginally higher wages than women whose mothers stayed home full-time. The effects on labor market outcomes are non-significant for men. Maternal employment is also associated with adult outcomes at home. Sons raised by an employed mother spend more time caring for family members than men whose mothers stayed home full-time, and daughters raised by an employed mother spend less time on housework than women whose mothers stayed home full-time. Our findings reveal the potential for non-traditional gender role models to gradually erode gender inequality in homes and labor markets.

Download working paper: http://www.hbs.edu/faculty/Pages/item.aspx?num=49311