Publications

March 1989 (Revised April 1998)
Case

Marriott Corporation: The Cost of Capital (Abridged)

By: Richard S. Ruback

Gives students the opportunity to explore how a company uses the Capital Asset Pricing Model (CAPM) to compute the cost of capital for each of its divisions. The use of Weighted Average Cost of Capital (WACC) formula and the mechanics of applying it are stressed. View Details

Keywords: Cost of Capital; Mathematical Methods

Educators

2020
Working Paper

Contract Duration and the Costs of Market Transactions

By: Alexander MacKay

The optimal duration of a supply contract balances the costs of reselecting a supplier against the costs of being matched to an inefficient supplier when the contract lasts too long. I develop a structural model of contract duration that captures this tradeoff and... View Details

Keywords: Vertical Relationships; Transaction Costs; Contract Duration; Identification; Supply Chain; Cost; Contracts; Auctions; Mathematical Methods

SSRN

2008
Working Paper

Allocating Marketing Resources

By: Sunil Gupta and Thomas J. Steenburgh

Marketing is essential for the organic growth of a company. Not surprisingly, firms spend billions of dollars on marketing. Given these large investments, marketing managers have the responsibility to optimally allocate these resources and demonstrate that these... View Details

Keywords: Investment Return; Resource Allocation; Marketing; Demand and Consumers; Mathematical Methods

2008
Chapter

Allocating Marketing Resources

By: Sunil Gupta and Thomas J. Steenburgh

Companies spend billions of dollars on marketing every year because it is essential to organic growth. Given these large investments, marketing managers have the responsibility to optimally allocate resources and to demonstrate that their investments generate... View Details

Keywords: Investment Return; Resource Allocation; Marketing; Demand and Consumers; Mathematical Methods

2010
Working Paper

Quality Provision, Expected Firm Altruism and Brand Extensions

By: Julio J. Rotemberg

This paper studies quality choice in a model where consumers expect firms to act altruistically. It is shown that, under plausible assumptions regarding this altruism and the reaction of consumers to firms that demonstrate insufficient altruism, existing firms (or... View Details

Keywords: Brands and Branding; Consumer Behavior; Product Development; Corporate Social Responsibility and Impact; Quality; Mathematical Methods

2023
Article

On Minimizing the Impact of Dataset Shifts on Actionable Explanations

By: Anna P. Meyer, Dan Ley, Suraj Srinivas and Himabindu Lakkaraju

The Right to Explanation is an important regulatory principle that allows individuals to request actionable explanations for algorithmic decisions. However, several technical challenges arise when providing such actionable explanations in practice. For instance, models... View Details

Keywords: Mathematical Methods; Analytics and Data Science

2005
Working Paper

Nominal versus Indexed Debt: A Quantitative Horse Race

By: Laura Alfaro and Fabio Kanczuk

The main arguments in favor of and against nominal and indexed debt are the incentive to default through inflation versus hedging against unforeseen shocks. We model and calibrate these arguments to assess their quantitative importance. We use a dynamic equilibrium... View Details

Keywords: Borrowing and Debt; Taxation; Risk and Uncertainty; Inflation and Deflation; System Shocks; Developing Countries and Economies; Mathematical Methods

2001
Working Paper

When Does the Market Matter? Stock Prices and the Investment of Equity Dependent Firms

By: Malcolm Baker, Jeremy Stein and Jeffrey Wurgler

We use a simple model of corporate investment to determine when investment will be sensitive to non-fundamental movements in stock prices. The key cross-sectional prediction of the model is that stock prices will have a stronger impact on the investment of firms that... View Details

Keywords: Investment; Equity; Stocks; Price; Mathematical Methods; Forecasting and Prediction

spring 1987
Article

Second-Sourcing and the Experience Curve: Price Competition in Defense Procurement

By: James J. Anton and Dennis A. Yao

We examine a dynamic model of price competition in defense procurement that incorporates the experience curve, asymmetric cost information, and the availability of a higher cost alternative system. We model acquisition as a two-stage process in which initial production... View Details

Keywords: Acquisition; Government and Politics; Price; Competition; Mathematical Methods

2009
Chapter

Plant-Size Distribution and Cross-Country Income Differences

By: Laura Alfaro, Andrew Charlton and Fabio Kanczuk

We investigate, using plant-level data for 79 developed and developing countries, whether differences in the allocation of resources across heterogeneous plants are a significant determinant of cross-country differences in income per worker. For this purpose, we use a... View Details

Keywords: Factories, Labs, and Plants; Developing Countries and Economies; Wages; Resource Allocation; Mathematical Methods

2008
Working Paper

Firm-Size Distribution and Cross-Country Income Differences

By: Laura Alfaro, Andrew Charlton and Fabio Kanczuk

We investigate, using plant-level data for 79 developed and developing countries, whether differences in the allocation of resources across heterogeneous plants are a significant determinant of cross-country differences in income per worker. For this purpose, we use a... View Details

Keywords: Factories, Labs, and Plants; Developing Countries and Economies; Wages; Resource Allocation; Mathematical Methods

fall 2008
Article

Toward a Theory of Behavioral Operations

By: Francesca Gino and Gary P. Pisano

Human beings are critical to the functioning of the vast majority of operating systems, influencing both the way these systems work and how they perform. Yet most formal analytical models of operations assume that the people who participate in operating systems are... View Details

Keywords: Management Systems; Operations; Mathematical Methods; Behavior; Cognition and Thinking; Perspective; Theory

2011
Working Paper

Charitable Giving When Altruism and Similarity Are Linked

By: Julio J. Rotemberg

This paper presents a model in which anonymous charitable donations are rationalized by two human tendencies drawn from the psychology literature. The first is people's disproportionate disposition to help those they agree with while the second is the dependence of... View Details

Keywords: Philanthropy and Charitable Giving; Mathematical Methods; Attitudes; Interests; Perception; Wealth and Poverty

September 2010
Article

Do Inventory and Gross Margin Data Improve Sales Forecasts for U.S. Public Retailers?

By: Saravanan Kesavan, Vishal Gaur and Ananth Raman

Firm-level sales forecasts for retailers can be improved if we incorporate cost of goods sold, inventory, and gross margin (defined here as the ratio of sales to cost of goods sold) as three endogenous variables. We construct a simultaneous equations model, estimated... View Details

Keywords: Sales; Forecasting and Prediction; Distribution; Goods and Commodities; Cost; Public Sector; Profit; Mathematical Methods; Analytics and Data Science; Retail Industry; United States

September 2007
Article

(Noisy) Communication

By: Bharat Anand and Ron Shachar

Communication is central to many settings in marketing and economics. A focal attribute of communication is miscommunication. We model this key characteristic as a noise in the messages communicated, so that the sender of a message is uncertain about its perception by... View Details

Keywords: Communication Intention and Meaning; Interpersonal Communication; Cost vs Benefits; Marketing Communications; Performance Improvement; Mathematical Methods

18 Nov 2016
Conference Presentation

Rawlsian Fairness for Machine Learning

By: Matthew Joseph, Michael J. Kearns, Jamie Morgenstern, Seth Neel and Aaron Leon Roth

Motivated by concerns that automated decision-making procedures can unintentionally lead to discriminatory behavior, we study a technical definition of fairness modeled after John Rawls' notion of "fair equality of opportunity". In the context of a simple model of... View Details

Keywords: Machine Learning; Algorithms; Fairness; Decision Making; Mathematical Methods

2023
Working Paper

How People Use Statistics

By: Pedro Bordalo, John J. Conlon, Nicola Gennaioli, Spencer Yongwook Kwon and Andrei Shleifer

We document two new facts about the distributions of answers in famous statistical problems: they are i) multi-modal and ii) unstable with respect to irrelevant changes in the problem. We offer a model in which, when solving a problem, people represent each hypothesis... View Details

Keywords: Decision Choices and Conditions; Microeconomics; Mathematical Methods; Behavioral Finance

October 2007
Case

The AtekPC Project Management Office

By: F. Warren McFarlan, Mark Keil and John Hupp

Presents one company's efforts to implement a project management organization, or PMO, and the challenges they faced in doing so. Issues brought out in the case include defining the PMO's purpose and mission, the structure and governance of the PMO, and how to... View Details

Keywords: Projects; Goals and Objectives; Technological Innovation; Information Technology; Business Strategy; Mathematical Methods; Consulting Industry

Educators

2007
Working Paper

Optimal Reserve Management and Sovereign Debt

By: Laura Alfaro and Fabio Kanczuk

Most models currently used to determine optimal foreign reserve holdings take the level of international debt as given. However, given the sovereign's willingness-to-pay incentive problems, reserve accumulation may reduce sustainable debt levels. In addition, assuming... View Details

Keywords: Sovereign Finance; Borrowing and Debt; Financial Liquidity; International Finance; Emerging Markets; Mathematical Methods