Sandeep Baliga and Jeffrey Ely
The sunk-cost fallacy is a staple of Business 101. Yet new research suggests that, as mistakes go, it is surprisingly useful. The fallacy may serve as a mnemonic device, helping us to remember which projects we once found important. More →
Yael Hochberg, Michael J. Mazzeo and Ryan McDevitt
Yael Hochberg and Michael Mazzeo measured how cooperation among venture capital firms affects competition and profits. They uncovered a remarkable departure from the traditional pattern of market competition: the first competitor does not affect a firm nearly so much as later ones. More →
Xavier Calsamiglia, Teresa Garcia-Milà and Therese McGuire
A new study by Therese McGuire suggests that a guaranteed minimum distribution system is most efficient way of ensuring that all members of a society have access to essential goods and services. More →
Jennifer Brown and David A. Matsa
For the first time, the “sinking ship” effect, in which floundering firms fail to attract necessary human capital, is empirically investigated. Jennifer Brown and David Matsa scour data from a large job-search website to find that, as a firm’s financial health decreases, so do the number and quality of its job applicants. More →
Rakesh Vohra and Lakshman Krishnamurthi
When it comes to pricing goods and services, the obvious approaches aren’t always the correct ones. A chapter by Rakesh Vohra and Lakshman Krishnamurthi outlines counterintuitive ideas about pricing based on economic principles. More →
Jeffrey R. Campbell and Thomas N. Hubbard
Because sudden fluctuations in consumer demand are often precipitated by one-time events, evidence about how companies respond to demand shocks can be tough to find. But by examining how gas stations responded to demand before and after the construction of an interstate highway system in the 1960s, Thomas Hubbard finds a “beautiful, textbook example” of economic theory in action. More →
David Austen-Smith, Adam D. Galinsky, K. H. Chung and C. LaVanway
This tale of two brands explores whether a company can maintain consistent messaging in the face of seemingly contradictory marketing strategies. More →
Shane Greenstein and Feng Zhu
Wikipedia is a crowdsourced encyclopedia that anyone can edit, which means there is always potential for bias. Shane Greenstein systematically studied more than 100,000 articles on the site to determine whether such bias exists. More →
Razvan Lungeanu and John L. Ward
It is well known that in the for-profit world, family businesses operate differently than non-family businesses do. Now, Clinical Professor John L. Ward and doctoral candidate Razvan Lungeanu have documented important differences between family-run and non-family-run philanthropic foundations as well. More →
Daron Acemoglu, Georgy Egorov and Konstantin Sonin
Different government styles perform better under different circumstances, according to research by Georgy Egorov More →