In this paper, we investigate the impact of economic incentives on the international supply of big-screen movies. More particularly, we also study the impact of a 1998 increase in the term of copyright on U.S. movie production.

We study how financialization changed the informativeness of drivers for commodity futures returns. Based on a broad set of commodity futures, we show that the predictive power of fundamental, financial, and uncertainty variables for commodity returns varies substantially across different stages of financialization. We relate the changing informativeness of the drivers to the presence of financial hedgers, who use commodity exposure for portfolio diversification. Using the highly financialized crude oil market as a laboratory, we find that when the market share of financial hedgers is high, the predictive power of financial variables for short-term commodity returns increases, while the informativeness of fundamental variables for longer-term returns declines.

We report on two experiments investigating whether there is a gender difference in the willingness to compete against oneself (self-competition), similar to what is found when competing against others (other-competition). In one laboratory and one online market experiment, involving a total of 1,200 participants, we replicate the gender-gap in willingness to other-compete but find no evidence of a gender difference in the willingness to self-compete. We explore the roles of risk and confidence and suggest that these factors can account for the different findings. Finally, we document that self-competition does no worse than other-competition in terms of performance boosting.

Standardized information disclosures aim to help people compare complex financial products and make better choices. We investigate the extent to which information shown in a regulator-mandated dashboard helps retirement savers choose between alternative pension plans. We conduct incentivized experiments that collect participants’ repeated choices between two pension plans using the mandatory dashboard, and subsequently test whether an even simpler dashboard improves choices, and by how much. Participants switch quickly from a high- to a low-fee pension plan when they see explicit nominal fees but are significantly more confused by percentage fees and adjust slower. When differences between plan performance arise from gross returns, not fees, we find that complex information formats can seriously hinder participants’ recognition and reactions. We present a Bayesian updating model which estimates the relative noisiness of the signals from fees and gross returns across different treatments and use this model to show how better information presentation raises retirement savings.

Replacement hiring plays a central role in establishment dynamics. US establishments frequently report no net change in their employment, often for years, despite facing substantial gross turnover. We devise a tractable model in which replacement hiring is driven by a novel structure of frictions, combining firm dynamics, on-the-job search, and investments into job creation that are sunk at the point of replacement. A key implication is the emergence of vacancy chains. Quantitatively, the model reconciles the incidence of replacement hiring with large cross-establishment dispersion in labor productivity and largely replicates the volatility and persistence of job creation and unemployment.

We examine whether mandatory tax information exchange agreements between governments have real effects on firms’ physical trade in tangible goods. We posit that some of the physical trade in tangible goods flowing through low-tax jurisdictions is intended to facilitate income shifting. As such, shocks to enforcement via mandatory information exchange agreements could cause firms to change the physical flow of goods. Using firm-level shipping container data, we find that adoption of bilateral tax information exchange agreements (TIEAs) between the U.S. and foreign jurisdictions is associated with significant decreases in the volume of imports by U.S. firms from those jurisdictions. We also find reallocation effects: U.S. firms increase imports from jurisdictions in the same subregion as the treated jurisdiction, resulting in minimal overall change in total imports. To our knowledge, ours is the first study to document a connection among enforcement-related tax disclosure, income shifting, and physical trade flows. Data Availability: The data used in this study are available from the sources cited in the paper.

This study evaluates the impact of earnings on credit risk in the Credit Default Swap (CDS) market using levels, changes, and event study analyses. We find that earnings (cash flows, accruals) of reference firms are negatively and significantly correlated with the level of CDS premia, consistent with earnings (cash flows, accruals) conveying information about default risk. Based on the changes analysis, a 1 percent increase in ROA decreases CDS rates significantly by about 5 percent. We also find that (1) CDS premia are more highly correlated with below-median earnings than with above-median earnings and (2) CDS premia are more highly correlated with earnings of low-rated firms than with earnings of high-rated firms. Evidence indicates further that short-window earnings surprises are negatively and significantly correlated with CDS premia changes in the three-day window surrounding the preliminary earnings announcement, although the impact is concentrated in the shorter maturities.

Using the Vuolteenaho (2002) variance decomposition methodology, this study assesses the relative value relevance of cash flow, accrual, and expected return news on SEC and preliminary earnings filing dates, as measured by their contribution to the volatility of unexpected returns. Cash flow news is found to be more valuerelevant than accrual news. Although expected return (risk) news is the least valuerelevant, it is significantly correlated with changes in betas and returns at the preliminary and SEC filing dates, indicating association with changes in firm risk and discount rates. This study also documents that these informational components contain less (more) value-relevant information at the SEC filing date for firms with a higher proportion of long-term (short-term) sophisticated investors after controlling for other dimensions of the information environment.

Oligopoly models of price competition predict that strategic firms exercise market power and generate inefficiencies. However, heterogeneity in firms’ strategic ability also generates inefficiencies. We study the Texas electricity market where firms exhibit significant heterogeneity in how they deviate from Nash equilibrium bidding. These deviations, in turn, increase the cost of production. To explain this heterogeneity, we embed a cognitive hierarchy model into a structural model of bidding and estimate firms’ strategic sophistication. We find that firm size and manager education affect sophistication. Using the model, we show that mergers which increase sophistication can increase efficiency despite increasing market concentration.

In the US Senate, roll calls are held in alphabetical order. We document that senators early in the order are less likely to vote with the majority of their own party than those whose last name places them at the end of the alphabet. To speak to the mechanism behind this result, we develop a simple model of sequential voting, in which forward-looking senators rely on backward induction in order to free ride on their colleagues. Estimating our model structurally, we find that this form of strategic behavior is an important part of equilibrium play. We also consider, but ultimately dismiss, alternative explanations related to learning about common values and vote buying.