Found 44 article(s) for author 'Andrei Shleifer'

Informality and Development

Informality and Development. Andrei Shleifer, Summer 2014, Paper. “In developing countries, informal firms account for up to half of economic activity. They provide livelihood for billions of people. Yet their role in economic development remains controversial. Some, like Hernando De Soto (1989, 2000), see informal firms as an untapped reservoir of entrepreneurial energy, held back by government regulations. In this view, unleashing this energy by reducing entry regulations or improving property rights would fuel growth and development…” May require purchase or user account. Link Verified October 18, 2014

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Competition for Attention

Competition for Attention. Andrei Shleifer, June 2014, Paper. “We present a model of market competition and product differentiation in which consumers’ attention is drawn to the products’ most salient attributes. Firms compete for consumer attention via their choices of quality and price. Strategic positioning of a product affects how all other products are perceived. With this attention externality, depending on the cost of producing quality some markets exhibit “commoditized” price salient equilibria, while others exhibit “de-commoditized” quality salient equilibria..” Link

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X-CAPM: An Extrapolative Capital Asset Pricing Model

X-CAPM: An Extrapolative Capital Asset Pricing Model. Robin Greenwood, Andrei Shleifer, March 26, 2014, Paper. “Survey evidence suggests that many investors form beliefs about future stock market returns by extrapolating past returns. Such beliefs are hard to reconcile with existing models of the aggregate stock market. We study a consumption-based asset pricing model in which some investors form beliefs about future price changes in the stock market by extrapolating past price changes, while other investors hold fully rational beliefs…” Link verified August 21, 2014

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X-CAPM: An Extrapolative Capital Asset Pricing Model

X-CAPM: An Extrapolative Capital Asset Pricing Model. Robin Greenwood, Andrei Shleifer, March 26, 2014, Paper. “Survey evidence suggests that many investors form beliefs about future stock market returns by extrapolating past returns. Such beliefs are hard to reconcile with existing models of the aggregate stock market. We study a consumption-based asset pricing model in which some investors form beliefs about future price changes in the stock market by extrapolating past price changes, while other investors hold fully rational beliefs. We find that the model captures many features of actual prices and returns…” May require purchase or user account. Link Verified October 18, 2014

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Finance and the Preservation of Wealth

Finance and the Preservation of Wealth. Andrei Shleifer, February 2014, Paper. “We introduce the model of asset management developed in Gennaioli, Shleifer, and Vishny (GSV, 2014) into a Solow-style neoclassical growth model with diminishing returns to capital. Savers rely on trusted intermediaries to manage their wealth (claims on capital stock), who can charge fees above costs to trusting investors. In this model, the ratio of financial income to GDP increases with the ratio of aggregate wealth to GDP. Both rise along the convergence path to steady state growth. We examine several further…” Link Verified October 18, 2014

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Expectations of Returns and Expected Returns

Expectations of Returns and Expected Returns. Robin Greenwood, Andrei Shleifer, January 11, 2014, Paper. “We analyze time series of investor expectations of future stock market returns from six data sources between 1963 and 2011. The six measures of expectations are highly positively correlated with each other, as well as with past stock returns and with the level of the stock market. However, investor expectations are strongly negatively correlated with model-based expected returns. The evidence is not consistent with rational expectations representative investor models of returns…” Link Verified October 18, 2014

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Money Doctors

Money Doctors. Andrei Shleifer, August 2013, Paper. “We present a new model of investors delegating portfolio management to professionals based on trust. Trust in the manager reduces an investor’s perception of the riskiness of a given investment, and allows managers to charge fees. Money managers compete for investor funds by setting fees, but because of trust fees do not fall to costs. In equilibrium, fees are higher for assets with higher expected return, managers on average underperform the market net of fees, but investors nevertheless prefer to hire managers to investing on their own…” Link

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A Model of Shadow Banking

A Model of Shadow Banking. Andrei Shleifer, August 2013, Paper. “We present a model of shadow banking in which banks originate and trade loans, assemble them into diversified portfolios, and finance these portfolios externally with riskless debt. In this model: outside investor wealth drives the demand for riskless debt and indirectly for securitization, bank assets and leverage move together, banks become interconnected through markets, and banks increase their exposure to systematic risk as they reduce idiosyncratic risk through diversification…” Link Verified October 18, 2014

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Salience and Asset Prices

Salience and Asset Prices. Andrei Shleifer, May 2013, Paper. “In Bordalo, Germaoli, and Shleifer (2012a) – henceforth, BGS (2012a) – we described a new approach to choice under risk that we called salience theory. In comparisons of risky lotteries, we argued, individuals’ attention is drawn to those payoffs which are most different or salient relative to the average. In making choices, individuals overweight these salient payoffs relative to their objective probabilities. A simple formalization of such salience-based probability weighting provides an intuitive account of a variety of puzzling evidence in the decision theory…” Link Verified October 18, 2014

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Government Ownership and Privatization

Government Ownership and Privatization. Andrei Shleifer, March 13, 2013, Opinion. “Fifty years ago, economists, politicians, and the public believed that important industries should be owned by the government. Reasons included concern with monopoly power and a lack of regard for social objectives. In many developing but also developed countries (not to mention communist states), “key sectors” such as banking, energy, transportation, steel became government owned. By 1980s, it became widely recognized that government ownership is extremely inefficient…” Link Verified October 19, 2014

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