Cost overruns on multi-period projects are large and frequent in natural environments. Reasons for these overruns include cost understatements in initial project proposals and escalation of commitment to projects when initial actual costs turn out to be higher than expected. Prior literature has suggested, and some firms have implemented, a device that limits escalation and thus potentially reduces cost overruns: changing decision makers (superiors) so that the manager who approves continuation of a project is not the same individual who approved the project initially. We provide theoretical explanations and experimental evidence about how changing versus continuing superiors affect the underestimates of cost in initial project proposals. We find that although changing superiors, as expected, are more likely than are continuing superiors to react skeptically to continuation proposals when first-period cost overruns have occurred, this does not reduce initial cost understatements and overruns. On the contrary, in our setting it leads to greater initial understatements and overruns. Subordinates anticipate that new superiors will be more critical of their projects; hence, they discount later-period payoffs and focus on gaining initial funding by providing understated cost estimates.

We estimate demand for residential broadband using high-frequency data from subscribers facing a three-part tariff. The three-part tariff makes data usage during the billing cycle a dynamic problem, thus generating variation in the (shadow) price of usage. We provide evidence that subscribers respond to this variation, and we use their dynamic decisions to estimate a flexible distribution of willingness to pay for different plan characteristics. Using the estimates, we simulate demand under alternative pricing and find that usage-based pricing eliminates low-value traffic. Furthermore, we show that the costs associated with investment in fiber-optic networks are likely recoverable in some markets, but that there is a large gap between social and private incentives to invest.

In this study we examine whether the reported performance of one firm affects the discretionary reporting behavior of another firm. We do this by identifying the leader within each industry, defined as the first large announcing firm. We find that the discretionary performance of followers (those firms announcing after the leader) relates positively to the leader's reported performance. Specifically, when the leader misses analysts’ expectations, followers report lower discretionary accruals, have fewer income‐decreasing special items, and are less likely to meet analysts’ expectations. In contrast, when leaders report good news, followers report higher discretionary accruals and are more likely to meet expectations (although we do not find evidence of a positive association between leaders’ good news and followers’ income‐decreasing special items). Overall, the results are consistent with managers of followers perceiving that earnings news of the leader will affect investors’ and others’ performance expectations for their firms.

This study examines the implicit incentive effects of horizontal monitoring and team member dependence for individuals working in teams but facing explicit incentives based solely on measures of individual performance. We combine proprietary performance data with survey data for 133 internal auditors. We show that the social influences of relatively high levels of both horizontal monitoring and team member dependence provide implicit incentives that motivate individual performance, making the provision of team rewards unnecessary to ensure individual and team productivity. We conclude that horizontal monitoring and team member dependence are complementary control mechanisms whose effectiveness helps explain the observed practice of organizing work into teams without explicit team‐based rewards.

This study was begun while the author was on a Brookings Economic Policy Fellowship in the Office of Economic Research of the Economic Development Administration. Acknowledgements are due Paul L. Burgess, Richardj Cebula, James A. Chalmers, Herbert M. Kaufman, Todd Sandler, WalterJ Wadycki, and the referees for this journal, all of whom have made helpful comments on earlier drafts of the paper and none of whom bears any responsibility for remaining shortcomings.

Our research firstly tests the difference in investment efficiency between state-owned enterprises (SOEs) and private firms and secondly evaluates the effect of privatisation and equitisation policies on the investment efficiency of former state owned enterprises (SOEs). We use a novel dataset from Viet Nam which covers large and non-listed SMEs across construction, manufacturing, and service sectors. Our methodology uses a structural model to test the relationship between Tobin's Q and capital spending. While evident differences in investment efficiency are found across heterogeneous groups of private firms (size, industry, financially constrained and location), we find no evidence of investment spending being linked to marginal returns by SOEs across all sectors and size classes. However, former SOEs that have been privatised and equitized with a minority state shareholding display positive links between Q and investment. In fact, the link is stronger for these firms than for private firms. Differences are also evident across size and sector highlighting that the method of divestment chosen by government shareholders has a differential impact on efficiency across groups of firms and industries.

We examine the role of stochastic feasibility in consumer choice using a random conditional choice set rule (RCCSR) and uniquely characterize the model from conditions on stochastic choice data. Feasibility is modeled to permit correlation in availability of alternatives. This provides a natural way to examine substitutability/complementarity. We show that an RCCSR generalizes the random consideration set rule of [Manzini and Mariotti, 2014]. We then relate this model to existing literature. In particular, an RCCSR is not a random utility model.

extent to which product prices respond to exchange-rate-induced changes in costs. This research has revealed that the percentage change in the prices of imported goods is smaller than the percentage change in exchange rates of the exporting country and that price responses differ across destinations, a phenomenon termed to This finding may indicate market imperfections in international trade: for example, those that may arise in the case of segmented markets. Alternatively, these empirical facts may reflect the sale of products whose production occurs in multiple locations. When firms are able to shift their production across borders or alter their location of sourcing, their costs will not change one-for-one with home-country exchange-rate movements, and therefore their prices are unlikely to change one-for-one with exchange-rate movements. However, this possibility has not been addressed empirically in the literature on pricing to market.' This study contributes to the literature by estimating exchangerate pass-through while controlling for local production in the destination market. We focus on the U.S. automobile market, and the pricing of U.S. and Japanese firms in particular for several reasons. First, we have product-level information on pricing and content, and there is substantial variation in destination-country production across products and over time. Second, existing studies have found evidence of pricing to market and incomplete exchange-rate passthrough in automobile markets, providing a useful comparison for our results and making this an appropriate market in which to study the effect of local production on exchange-rate passthrough. Consistent with other studies, we find that Japanese firms partially pass-through Japanese cost changes to their U.S. customers. In addition, we find that this partial pass-through characterizes not only Japanese cost shocks, but cost shocks that these Japanese firms experience in their U.S. production. This finding persists in a sample that includes both U.S. and Japanese firms; automobile firms generally do not pass-through cost shocks in their entirety. Our data also show that those Japanese auto

1995). Our research examines whether the expansion of U.S. investment in foreign equities and the change in the composition of the foreign portfolio over time is consistent with standard models of international portfolio choice. To answer this question, we combine data on cross-border transactions in foreign equities with data on equity returns. Our approach has three important advantages over previous tests of models of international portfolio choice. First, we bring data on asset prices as well as data on the quantities of assets purchased to bear in the empirical tests.' Second, our testing procedure is robust to time-invariant hedge factors. This is because net purchases reflect changes in portfolio weights, and constant hedge factors that might explain home bias in levels do not affect the adjustment of the port