Cahiers de recherche

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Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Agents make predictions based on similar past cases. The notion of similarity is itself learnt from experience by "second-order induction": past cases inform agents also about the relative importance of various attributes in judging similarity. However, there may be multiple "optimal" similarity functions for explaining past data. Moreover, the computation of the optimal similarity function is NP-Hard. We offer conditions under which rational agents who have access to the same observations are likely to converge on the same predictions, and conditions under which they may entertain different probabilistic beliefs.

Départements : Finance, Marketing

Online crowdfunding is a popular new tool for raising capital to commercialize product innovation. Product innovation must be both novel and useful (1-4). Therefore, we study the role of novelty and usefulness claims on Kickstarter. Startlingly, we find that a single claim of novelty increases project funding by about 200%, a single claim of usefulness increases project funding by about 1200%, and the co-occurrence of novelty and usefulness claims lowers funding by about 26%. Our findings are encouraging because they suggest the crowd strongly supports novelty and usefulness. However, our findings are disappointing because the premise of crowdfunding is to support projects that are innovative, i.e. that are both novel and useful, rather than projects that are only novel or only useful.

Mots clés : Crowdfunding, Entrepreneurship, Innovation

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

We argue that a precedent is important not only because it changes the relative frequency of a certain event, making it positive rather than zero, but also because it changes the way that relative frequencies are weighed. Specifically, agents assess probabilities of future events based on past occurrences, where not all of these occurrences are deemed equally relevant. More similar cases are weighed more heavily than less similar ones. Importantly, the similarity function is also learnt from experience by "second-order induction". The model can explain why a single precedent affects beliefs above and beyond its effect on relative frequencies, as well as why it is easier to establish reputation at the outset than to re-establish it after having lost it. Finally, we discuss more sophisticated forms of learning, by which similarity is defined not only on cases but also on attributes, and the importance of some attributes, learnt from the data by second-order induction, can also affect the perceived importance of other attributes.

Départements : Droit et fiscalité, GREGHEC (CNRS)

This paper discusses the legal implications deriving from the choice of an interinstitutional agreement to regulate interest representation activities in the European Union. In particular, it focuses on whether this instrument may validly allow the European Parliament to impose a set of requirements on its Members (in relation to their free and independent mandate), the political groups, the intergroups and other informal groupings of Members, and on the accredited parliamentary assistants (APAs). It concludes that, given its legal status, the proposed IIA operationalises rather than extending the existing transparency obligations stemming from the Treaty and its requirements are proportionate to the aims pursued. As such it does not affect the free and independent mandate of Members as it is defined in the Members’ Statute nor it conflicts with the prerogatives of other internal actors. The proposed IIA intends to develop and complement obligations of primary law, such as the duty of openness and transparency that already govern the Statute and its interpretation, without compromising the substantive rights and obligations provided by the former. These obligations of primary law already put limits on the freedom and the independence of the Members enshrined in Article 2 (1) of the Statute as well as that of other internal actors. Additionally, the proposed mandatory Transparency Register also allows Members to easily identify the identity of interest representatives they meet, thus enhancing the Member’s ability to inform themselves.

Mots clés : Open government, Transparency, Participation, Civic empowerment, Legitimacy, Accountability, Civil society, European Union, Good governance

Départements : Marketing, GREGHEC (CNRS)

Although choosing from large assortments has often been found to be demotivating, a robust finding in the marketing literature is that consumers generally prefer larger product assortments. Standard explanations for this preference for larger assortments have focused on reason-based considerations revolving around large assortments enabling potentially “better” choices. This paper offers a different and novel, affect-based explanation. We argue that the relative preference for larger assortments is driven in part by the greater experience utility that consumers derive from reviewing such assortments. Because most products are carriers of positive affect, consumers tend to derive greater experience utility from reviewing larger assortments compared to smaller assortments. Support for this general proposition was found across four experimental studies using different strategies to document the role of affect-based experience utility in driving the preference for larger assortments. Theoretical and substantive implications are discussed.

Mots clés : assortment size, affect, emotion, consumer decision making

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

This paper examines when human-capital-intensive firms reconfigure their human assets for incoming client projects, and how clients matter to firms’ reconfiguration decisions. Using micro-data in the UK merger and acquisition (M&A) legal services industry, we find that law firms consistently reconfigure the combinations of lawyers working together on M&A mandates, forgoing synergies from tried-and-tested combinations. Firms’ reconfiguration decisions are also influenced by prior relations with clients, and client attributes. Firms are more likely to use tried-and-tested combinations of lawyers when providing services to existing clients, especially when the same lawyers have served those clients together previously. Further, the economic attractiveness of clients also decreases human asset reconfiguration. Our paper contributes to the literatures on strategic human capital and the micro-foundations of resource-based theory.

Mots clés : Strategic Human Capital; Resource Reconfiguration; Resource Based Theory; Micro-Foundations of Strategy; Human-Asset-Intensive Firms

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

This paper investigates the link between one managerial characteristic, the degree of risk aversion, and accounting conservatism. Two models are analyzed, one where the degree of conservatism is chosen by the principal (Board) and accounting information is used for stewardship, and a second where the principal delegates the choice of the degree of conservatism to the manager and accounting information is primarily used for investment efficiency. We show in the first model that higher risk aversion reduces the demand for conservatism from a stewardship point of view. In the second model, we show that delegation is an optimal way for the principal of committing to conservative reporting. Hiring a more risk-averse manager lowers the cost of implementing this conservative reporting. The two models provide opposite predictions for the association between managerial risk aversion and the degree of conservatism. Empirical evidence favors the second model’s prediction. The paper suggests that managers with specific characteristics and incentive contracts might be endogenously chosen by the firm to implement an ex-ante optimal degree of conservatism.

Mots clés : Accounting Conservatism, Risk Aversion, Limited Liability, Reporting Bias, Principal-Agent Theory, Stewardship, Investment Efficiency

Départements : Finance, GREGHEC (CNRS)

We study price and liquidity spillovers in U.S. stock markets around mutual fund fire sales. We find that the well-documented impact-reversal pattern for the returns of fire sale stocks (e.g., Coval and Stafford, 2007) spills over onto the stock returns of economic peers, with a magnitude that is around one fifth of the original effect. These spillovers extend to liquidity and are not explained by common funding shocks or the hedging activity of liquidity providers. We conclude that they represent information spillovers due to learning from prices, thus identifying cross-asset learning as an important driver for the commonality in returns and liquidity.

Mots clés : Learning, Spillovers, Liquidity, Comovement, Rational Expectations

Départements : Finance, GREGHEC (CNRS)

In an empirical study of cash mergers since 1996, we find that the equity options on target firms display a pronounced smile pattern in their implied volatilities which gets more pronounced when the merger success probability gets higher. We propose an arbitrage-free model to analyze option prices for firms undergoing a cash merger attempt. Our formula matches well the observed merger volatility smile. Furthermore, as predicted by the model, we show empirically that the merger volatility smile has a kink at the offer price, and that the magnitude of the kink is proportional to the merger success probability.

Mots clés : Mergers and acquisitions, Black-Scholes formula, success probability, fallback price, Markov Chain Monte Carlo

Départements : Finance, GREGHEC (CNRS)

Do claims on the private sector serve the role of safe assets? We answer this question using high-frequency panel data on prices and quantities of certificates of deposit (CD) and commercial paper (CP) issued in Europe. We show that only very short-term private securities benefit from a premium for safety. Using several identification strategies, we show that the issuance of short-term CDs, but not of CPs, strongly responds to measures of safety demand. The private production of safe assets is stronger for issuers with high credit worthiness, and breaks down during episodes of market stress. We conclude that even very short-term private assets are sensitive to changes in the information environment and should not be treated as equally safe at all times.

Mots clés : Safe assets, Collateral, Short-term debt, Treasuries