Decision Making & Negotiations

The 2007-2009 financial crisis that started in the summer of 2007 had its origins in the US housing policies, the subprime mortgage market in particular, and the end of the real estate bubble in the US. Careful consideration of the causes, consequences and policy responses suggest that various factors contributed to the severity of the 2007-08 crisis, and experts disagree about the weights to attach to each in explaining what is now regarded as the most significant economic contraction since the Great Depression.

Sovereign Wealth Funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors.

We propose a model of dynamic corporate investment, financing, and risk management for a financially constrained firm. The model highlights the central importance of the endogenous marginal value of liquidity (cash and credit line) for corporate decisions.

A perennial question facing managers is how much decision latitude to give their employees at work. The current research investigates how decision latitude affects employees' perceptions of managers' personalities and, in turn, their leadership effectiveness. Results from three studies using different methods (two experiments and a survey) indicate an inverted-U shaped relationship between degree of decision latitude and leadership effectiveness perceptions.

Particle learning provides a simulation-based approach to sequential Bayesian computation. To sample from a posterior distribution of interest we use an essential state vector together with a predictive and propagation rule to build a resampling-sampling framework. Predictive inference and sequential Bayes factors are a direct by-product. Our approach provides a simple yet powerful framework for the construction of sequential posterior sampling strategies for a variety of commonly used models.

Leading up to the recent crisis, government encouraged risky lending, and failed to measure banks' risks credibly or to require sufficient capital. Regulators also failed to losses or enforce intervention protocols for timely resolution. This paper proposes radical policy changes to prevent a recurrence. The need is not for more complex rules and more supervisory discretion, but rather for simpler rules that are meaningful in measuring and limiting risk, hard for market participants to circumvent and credibly enforced by supervisors.

A growing literature suggests that even in the absence of any ability to predict returns, holding options on the benchmarks or trading frequently can generate positive alpha. The ratio of alpha to its tracking error appraises a fund's performance. This paper derives the performance-maximizing strategy, which turns out to be a variant of a buy-write strategy, and the least upper bound on such performance enhancement. If common equity indices are used as benchmarks, the potential alpha generated from trading frequently can be substantial in magnitude, but it carries considerable risk.

Nursing care is arguably the single biggest factor in both the cost of hospital care and patient satisfaction. Inadequate inpatient nursing levels have also been cited as a significant factor in medical errors and emergency room overcrowding. Yet, there is widespread dissatisfaction with the current methods of determining nurse staffing levels, including the most common one of using minimum nurse-to-patient ratios. In this paper, we represent the nursing system as a variable finite-source queuing model.

Over the years, the level of analytical rigor has risen in articles published in marketing academic journals. While, ceteris paribus, rigor is desirable, there is a growing sense that rigor has become a, if not the, goal for research in marketing. Consequently, other desirable characteristics, such as relevance, communicability, and simplicity, have been downplayed, to the detriment of the field of marketing.