This paper analyzes a 1992 decrease in U.S. federal income tax withholding that shifted the timing of income tax payments while leaving ultimate tax burdens unchanged. Consequently income typically received as a lump-sum refund on filing a tax return was shifted into the previous year's monthly income. This paper considers the impact of the withholding change in the context of mental accounting and finds a decrease in the probability that households contributed to a tax-preferred retirement account. Additional robustness tests show that short-term saving did not simultaneously increase and that the main findings are not driven by liquidity constraints.

Warehouse Location is a nonconvex programming problem involving the geographic placing and sizing of intermediate facilities in distribution studies. The nonconvexities are caused by economies of scale associated with the cost of building and operating the facilities. A heuristic program has been developed for solving warehouse location problems when these economies are representable by continuous concave functions. The paper discusses the heuristics used and computational experience with the program on “practical” problems. On the basis of two numerical examples for which an optimal solution was obtained through a special purpose experimental mixed integer programming code, it is conjectured (1) that near optimal solutions can be achieved using the heuristic program and (2) that optimal sizing and locating of facilities are very sensitive to the shapes of the warehousing cost functions.

We develop an empirical test for whether households understand or misperceive their marginal tax rate. Our identifying variation comes from the loss of the Child Tax Credit when a child turns 17. Using this age discontinuity, we find that despite this tax liability increase being lump-sum and predictable, households reduce their reported wage income upon discovering they have lost the credit. This finding suggests that households misinterpret at least part of this tax liability change as an increase in their marginal tax rate. This evidence supports the hypothesis that tax complexity can cause confusion and leads to unintended behavioral responses. (JEL D12, D14, H24, H31)

Do firms take more or less risk in response to performance shortfalls? Although the behavioral theory of the firm (BTOF) has been a guiding framework in this area, empirical evidence remains inconclusive. Moreover, empirical work has largely failed to distinguish between firms’ motivation to take risks and their ability to do so. In this study, recognizing the distinct roles played by these two components, we specifically focus on risk-taking motivation. Drawing on March and Shapira’s shifting-focus-of-attention model, we highlight that firms’ motivation to take risks is contingent on their chosen reference points and the shifts between them. We propose that, on average, risk-taking motivation exhibits a positive monotonic relationship with performance shortfalls, a sequence involving an initial increase, subsequent leveling off, and then a renewed increase. To advance the theory of risk-taking motivation, we extend our inquiry to consider the moderating effect of concern for firm survival and subsequently explore factors influencing this concern. Furthermore, we investigate a critical implication of differentiating risk-taking motivation and ability. Because of the mismatch between motivation and ability, underperforming firms take the greatest risks when their performance is moderately below aspirations, with motivation and ability being at moderate levels, leading to an inverted U-shaped relationship between performance shortfalls and risk taking. Empirical evidence derived from experiments and archival data supports our theoretical predictions. This study contributes to the BTOF literature by demonstrating that underperforming firms’ risk-taking behavior is jointly determined by their motivation, ability, focus of attention, and concern for survival. Funding: This work was supported by the Israel Science Foundation [Grant 677/20]. Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2020.13953 .