Found 41 article(s) for author 'Richard Zeckhauser'

Insider Trading and Stock Splits

Insider Trading and Stock Splits. Richard Zeckhauser, July 30, 2012, Paper. “Stock splits have long presented a puzzle in finance. Unresolved questions are why do firms undertake them, and why do they offer abnormal returns both before and after the announcement date? Conventional explanations focus on making stocks more liquid and signaling firm prospects. However, abnormal returns, particularly before the announcement date, should raise strong suspicions of insider trading. We examined 718 split events in the emerging stock market of Vietnam and found evidence indicating illegal insider trading in stock splits by firms more vulnerable…” Link

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Assessing Uncertainty in Intelligence

Assessing Uncertainty in Intelligence. Jeffrey Friedman, Richard Zeckhauser, June 2012, Paper. “This article addresses the challenge of managing uncertainty when producing estimative intelligence. Much of the theory and practice of estimative intelligence aims to eliminate or reduce uncertainty, but this is often impossible or infeasible. This article instead argues that the goal of estimative intelligence should be to assess uncertainty. By drawing on a body of nearly 400 declassified National Intelligence Estimates as well as prominent texts on analytic tradecraft, this article argues that current tradecraft methods attempt to eliminate…” Link

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The Returns to Education in China: Evidence from the 1986 Compulsory Education Law

The Returns to Education in China: Evidence from the 1986 Compulsory Education Law. Richard Zeckhauser, June 2012, Paper. “As China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational…” (May require user account or purchase) Link

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Addressing Catastrophic Risks: Disparate Anatomies Require Tailored Therapies

Addressing Catastrophic Risks: Disparate Anatomies Require Tailored Therapies. Richard Zeckhauser, November 1, 2011, Paper. “Catastrophic risks differ in terms of their natural or human origins, their possible amplification by human behaviors, and the relationships between those who create the risks and those who suffer the losses. Given their disparate anatomies, catastrophic risks generally require tailored therapies, with each prescribed therapy employing a specific portfolio of policy strategies. Given that catastrophic risks occur rarely, and impose extreme losses, traditional mechanisms for controlling risks…” Link

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Deterring and Compensating Oil Spill Catastrophes: The Need for Strict and Two-Tier Liability

Deterring and Compensating Oil Spill Catastrophes: The Need for Strict and Two-Tier Liability. Richard Zeckhauser, July 2011, Paper. “The BP Deepwater Horizon oil spill highlighted the glaring weakness in the current liability and regulatory regime for oil spills and for environmental catastrophes more broadly. This article proposes a new liability structure for deep sea oil drilling and for catastrophic risks generally. It delineates a two-tier system of liability. The first tier would impose strict liability up to the firm’s financial resources plus insurance coverage. The second tier would be an annual tax equal to the expected…” Link

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The “CAPS” Prediction System and Stock Market Returns

The “CAPS” Prediction System and Stock Market Returns. Christopher Avery, Richard Zeckhauser, July 2011, Paper. “We study the predictive power of approximately 2.5 million stock picks submitted by individual users to the “CAPS” website run by the Motley Fool company ( These picks prove to be surprisingly informative about future stock prices. Indeed, a strategy of shorting stocks with a disproportionate number of negative picks on the site and buying stocks with a disproportionate number of positive picks produces a return of over nine percent per annum over the sample period. These results…” Link

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The Behavior of Savings and Asset Prices When Preferences and Beliefs are Heterogeneous

The Behavior of Savings and Asset Prices When Preferences and Beliefs are Heterogeneous. Richard Zeckhauser, June 27, 2011, Paper. “Movements in asset prices are a major risk confronting individuals. This paper establishes new asset pricing results when agents differ in risk preference, time preference and/or expectations. It shows that risk tolerance is a critical concept driving savings decisions, consumption allocations, prices and return volatilities. Surprisingly, due to the equilibrium risk sharing, the precautionary savings motive in the aggregate can vastly exceed that of even the most prudent actual agent in the…” Link

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Why Smart Business Wants Stronger Government: Commentary

Why Smart Business Wants Stronger Government: Commentary. John Donahue, Richard Zeckhauser, May 24, 2011, Opinion, “Are you a cat person or a dog person? Red Sox fan or Yankees fan? Do you like rap music, or hate it? Sometimes you just have to decide which side you’re on. Do you favor a strong government, or a strong private sector? Here’s one crucial area where the choice — however routinely flagged as a fundamental cultural fault line — is fundamentally fictitious. While there are surely times and places where the private sector’s gain really is the public sector’s loss, and vice versa, in today’s U.S. there’s no simple trade-off. When government is weak — short on talent, insecure about its popular legitimacy — it can only do simple things.” Link

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The Methodology of Normative Policy Analysis

The Methodology of Normative Policy Analysis. Christopher Robert, Richard Zeckhauser, December 31, 2010, Paper. “Policy analyses frequently clash. Their disagreements stem from many sources, including models, empirical estimates, and values such as who should have standing and how different criteria should be weighted. We provide a simple taxonomy of disagreement, identifying distinct categories within both the positive and values domains of normative policy analysis. Using disagreements in climate policy to illustrate, we demonstrate how illuminating the structure of disagreement helps to clarify the way…” Link

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Causes of the Financial Crisis: Many Responsible Parties

Causes of the Financial Crisis: Many Responsible Parties. Richard Zeckhauser, June 2010, Paper. “This analysis argues that blame for the financial crisis falls specifically and heavily on a broad range of the private players and public regulators in our financial sector. Wall Street and the government joined hands in a situation of contributory negligence. Even recognizing the triggering event of the collapse of the subprime market, a key question arises: How did a relatively small loss – $1 billion in subprime mortgages – initiate such a gigantic loss amounting to $20 trillion? By contrast, the NASDAQ swoon of 2001-02, though entailing…” Link

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