D. S. Prasada Rao, E. Anthony Selvanathan, Dirk Pilat, Generalized Theil-Tornqvist Indices with Applications to International Comparisons of Prices and Real Output, The Review of Economics and Statistics, Vol. 77, No. 2 (May, 1995), pp. 352-360

Julian M. Alston, Kenneth A. Foster, Richard D. Gree, Estimating Elasticities with the Linear Approximate Almost Ideal Demand System: Some Monte Carlo Results, The Review of Economics and Statistics, Vol. 76, No. 2 (May, 1994), pp. 351-356

Richard M. Adams, Thomas D. Crocker, Richard W. Katz, Assessing the Adequacy of Natural Science Information: A Bayesian Approach, The Review of Economics and Statistics, Vol. 66, No. 4 (Nov., 1984), pp. 568-575

Although the FASB and IASB conceptual frameworks identify relevance and faithful representation as the fundamental qualitative characteristics of useful information, prior research suggests that revenue recognition accounting standards that restrict managerial discretion resulted in improved faithful representation but reduced relevance. We use the adoption of Accounting Standards Update (ASU) 2009‐13 and ASU 2009‐14 to examine the effects of increased managerial discretion to accelerate revenue recognition in multiple‐deliverable arrangements; that is, transactions where vendors sell multiple products or services that are delivered at different points in time. We find that increased discretion results in an increase in the relevance of reported revenues without reducing faithful representation. We further examine whether managers' strategic motivations influence the transparency of ASU 2009‐13 and ASU 2009‐14 adoption disclosure. Although firms providing opaque adoption disclosure do not exhibit a decline in the faithful representation of revenues following the standards' adoption, these firms are more likely than firms providing transparent adoption disclosure to accelerate revenue recognition opportunistically following adoption when incentives are high. These results provide important evidence for assessing whether standards that allow greater discretion in revenue recognition affect the usefulness of revenues and also provide evidence that strategic motivations to preserve flexibility in managing earnings influence the transparency of adoption disclosure.

Prior research documents that auditors fail to revise audit plans to effectively address identified fraud cues. While auditors may understand what evidence would address such cues, we propose that auditors fail to apply this understanding because they use implemental mindsets when making decisions for themselves (i.e., deciding). However, we also propose that auditors use deliberative mindsets when advising. To test our predictions, we assign auditors to a decider or an advisor role in a realistic case that contains seeded fraud cues and asks them to consider revising last year's plan. We also manipulate whether the case prompts auditors to revise the plan unconventionally . Results indicate decider‐condition auditors use implemental mindsets: Prompted deciders follow the unconventional plan without regard to underlying fraud risk and unprompted deciders stick with the same‐as‐last‐year plan. Advisor‐condition auditors use more deliberative mindsets: In the prompt and no prompt conditions, they identify plans that are strongly linked to their own fraud risk assessments and that better align with experts' recommended plan for effectively addressing the seeded fraud cues. Supplemental analyses suggest deciding and advising auditors both follow the experts' plan when they believe in its potential effectiveness but, after controlling for the influence of perceived effectiveness, deciding auditors follow it to a greater extent simply because they believe the PCAOB wants it. By contrast, advising auditors do not exhibit signs of excessive PCAOB influence. Our findings provide evidence that seeking informal advice (or thinking like an advisor) helps auditors to effectively revise audit plans in response to identified fraud risk—it helps when a prompt is present or not, suggesting it complements rather than merely substitutes for interventions meant to improve auditors' judgment and decision making.

We use student assignment lotteries to estimate the effect of charter school attendance on student achievement in Boston. We also evaluate a related alternative, Boston's pilot schools. Pilot schools have some of the independence of charter schools but are in the Boston Public School district and are covered by some collective bargaining provisions. Lottery estimates show large and significant score gains for charter students in middle and high school. In contrast, lottery estimates for pilot school students are mostly small and insignificant, with some significant negative effects. Charter schools with binding assignment lotteries appear to generate larger gains than other charters.

This paper uses a unique dataset from Denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance. We focus on the decision to appoint either a family or external chief executive officer (CEO). The paper uses variation in CEO succession decisions that result from the gender of a departing CEO's firstborn child. This is a plausible instrumental variable (IV), as male first-child firms are more likely to pass on control to a family CEO than are female first-child firms, but the gender of the first child is unlikely to affect firms' outcomes. We find that family successions have a large negative causal impact on firm performance: operating profitability on assets falls by at least four percentage points around CEO transitions. Our IV estimates are significantly larger than those obtained using ordinary least squares. Furthermore, we show that family-CEO underperformance is particularly large in fast-growing industries, industries with highly skilled labor force, and relatively large firms. Overall, our empirical results demonstrate that professional, nonfamily CEOs provide extremely valuable services to the organizations they head.

This paper presents new tests of the permanent income hypothesis and other widely used models of household behavior using data from the labor market. We estimate the excess sensitivity of job search behavior to cash-on-hand using sharp discontinuities in eligibility for severance pay and extended unemployment insurance (UI) benefits in Austria. Analyzing data for over one-half million job losers, we obtain three empirical results: (1) a lump-sum severance payment equal to two months of earnings reduces the job-finding rate by 8%–12% on average; (2) an extension of the potential duration of UI benefits from 20 weeks to 30 weeks similarly lowers job-finding rates in the first 20 weeks of search by 5%–9%; and (3) increases in the duration of search induced by the two programs have little or no effect on subsequent job match quality. Using a search-theoretic model, we show that estimates of the relative effect of severance pay and extended benefits can be used to calibrate and test a wide set of intertemporal models. Our estimates of this ratio are inconsistent with the predictions of a simple permanent income model, as well as naive rule of thumb behavior. The representative job searcher in our data is 70% of the way between the permanent income benchmark and credit-constrained behavior in terms of sensitivity to cash-on-hand.

We designed a commitment savings product for a Philippine bank and implemented it using a randomized control methodology. The savings product was intended for individuals who want to commit now to restrict access to their savings, and who were sophisticated enough to engage in such a mechanism. We conducted a baseline survey on 1777 existing or former clients of a bank. One month later, we offered the commitment product to a randomly chosen subset of 710 clients; 202 (28.4 percent) accepted the offer and opened the account. In the baseline survey, we asked hypothetical time discounting questions. Women who exhibited a lower discount rate for future relative to current trade-offs, and hence potentially have a preference for commitment, were indeed significantly more likely to open the commitment savings account. Mter twelve months, average savings balances increased by 81 percentage points for those clients assigned to the treatment group relative to those assigned to the control group. We conclude that the savings response represents a lasting change in savings, and not merely a short-term response to a new product.

We present experimental evidence on nonbinding, preplay communication in bilateral coordination games. To evaluate the effect of "cheap talk, " we consider two communication structures (one-way and two-way communication) and two types of coordination games (one with a cooperative strategy and a second in which one strategy is less "risky"). In games with a cooperative strategy, one-way communication increases play of the Pareto-dominant equilibrium relative to the no communication baseline; two-way communication does not always decrease the frequency of coordination failures. In the second type of game, two-way communication always leads to the Pareto-dominant Nash equilibrium, while one-way communication does not.