Working Papers

Demand for Information and Asset Pricing (with Azi Ben-Rephael, Zhi Da, and Ryan Israelsen)
                Revise and resubmit at the Journal of Finance
                  Winner, CICF Best Paper Prize

Academics typically rely on the supply of information that arrives to market to study how information acquisition affects asset prices. In this paper, we use measures of demand for information. We show that institutional demand is more likely than supply to be associated with a risk premium because it captures systematic information spillovers from other stocks and the macroeconomy. The CAPM performs better when institutions demand information, and the positive effect of FOMC announcements on risk premia appears to be modulated by investor demand on individual stocks. A predicted institutional demand measure computed using ex-ante information confirms our findings.

FinTech  and Consumer Well-Being in the Information Age (with Arna Olafsson and Michaela Pagel)
We analyze how FinTech adoption improves consumer .financial decision-making.
Using a Fuzzy Regression Discontinuity in Time design, we exploit the exogenous
introduction of a mobile application for a .financial aggregation platform. In re-
sponse, individuals accessed information about their transactions and bank account
balances more often, which led to signi.cant reduction in high-interest unsecured
debt and bank fees. The magnitudes are economically signifi.cant: for the overall
population, one additional monthly login reduced consumer debt by 14 percent over
a 2-year period. We quantify this effect within individuals and cross-sectionally, and
document the benefi.t that improved technology has on consumer .financial decision-

Competing for Capital: Auditing and Credibility in Financial Reporting (with Raphael Boleslavsky and Christoper Cotton)
Under review at the Review of Finance
When self-interested agents compete for scarce resources, they often exaggerate the promise
of their activities. As such, principals must consider both the quality of each opportunity and
each agent’s credibility. We show that principals are better off with less transparency because
they gain access to better investments. This is due to a complementarity between the agents’
effort provision and their ability to exaggerate. As such, it is suboptimal for principals to
prevent misreporting, even if doing so is costless. This helps explain why exaggeration is
ubiquitous during allocation decisions: money management, analyst coverage, private equity
fundraising, and venture capital investments.

To study how monetary policy affects the real economy, we re-evaluate the events
surrounding the 1920-1921 U.S. depression. We provide causal evidence that discount
rate changes by the Federal Reserve signi.ficantly affected economic output in the 1920s.
Our identi.fication strategy exploits county-level variation in access to the Fed's dis-
count window, and we implement this strategy with hand-collected data on banking
and agriculture in Illinois in the early 20th century. The mechanism for the Fed's effect
on agriculture was a bank credit channel, operating independently of any deflationary
effect on money supply. Our fi.ndings suggest that the Fed deliberately managed transitory
output shocks during 1920-1921 and lowered debt-to-output ratios in the years
leading to the Great Depression. As such, our fi.ndings call into question the conventional
narrative that Fed policy was misguided in its early years and during this 

                    Under review at Games and Economic Behavior
Creative destruction not only involves bringing new technology to market, it
imposes higher risk on the future of existing assets. We characterize the asset
pricing implications of creative destruction when Schumpeterian competition
takes place. Compared to fi.rst best, the quest for oligopoly rents leads to
over-investment in uncertain projects, spikes in the price-dividend ratio, and an
aftermath in which prices fall steeply as uncertainty resolves. If competition for
rents is sufficiently intense, the elevated price-dividend ratio predicts negative
future expected excess returns. This may provide a rational explanation for
why periods in which investors race to market during technological change may
promote investment bubbles. Our analysis yields novel empirical predictions
and we discuss how creative destruction affects the term structure of risk.
State sponsored retirement plans have been proposed and implemented to provide people with new access 
to defined contribution retirement opportunities. Many of these people have no other options and typically 
have low income and are less educated. We study optimal plan implementation in a theoretical model and 
analyze how the right menu of portfolio options and default option (i.e., libertarian paternalism) should be 
chosen based on the financial sophistication of the participants, their behavioral biases, the prevalent political 
philosophy, and the political economy. The paper provides several novel positive and normative implications, 
which appear to be empirically plausible.

Published Papers

Episodic Liquidity Crises: Cooperative and Predatory Trading (with Miguel Lobo and S. Viswanathan). Journal of Finance 62: 2235-2274, 2007.

Work Ethic, Employment Contracts, and Firm Value (with Simon Gervais). Journal of Finance 64: 785-821, 2009.

Strategic Price Complexity in Retail Financial Markets. Journal of Financial Economics 91: 278-287, 2009.

A Welfare Analysis of Regulation in Relationship Banking Markets (with Raphael Rob). Review of Finance 13: 369-400, 2009.

Public Trust, The Law, and Financial Investment (with Florin Dorobantu and S. Viswanathan). Journal of Financial Economics 92: 321-341, 2009.

Fear and Loathing in Las Vegas: Evidence from Blackjack Tables (with David Robinson). Judgement and Decision Making 4: 385-396, 2009.

Forced Liquidation of an Investment Portfolio. The International Journal of Central Banking December 2009: 173-176.

Optimal Portfolio Liquidation with Distress Risk (with David Brown and Miguel Lobo). Management Science 56: 1997-2014, 2010.

Obfuscation, Learning, and the Evolution of Investor Sophistication (with Gustavo Manso). Review of Financial Studies 24: 754-785, 2011.

Investment in Organization Capital (with Bhagwan Chowdry and Mark Garmaise). Journal of Financial Intermediation 21: 268-286, 2012.

Financial Education and Timely Decision Support: Lessons from Junior Achievement (with David Robinson). American Economic Review Papers and Proceedings 102: 305-308, 2012.

What Does Financial Literacy Training Teach Us? (with David Robinson). Journal of Economic Education 43: 235-247, 2012.

Legal Protection in Retail Financial Markets (with Simon Gervais). Review of Corporate Finance Studies 1: 68-108, 2012.

Competition, Comparative Performance, and Market Transparency (with Shaun Davies and Andrew Iannaccone). American Economic Journal: Microeconomics 4: 202-237, 2012.

Trading Complex Assets (with Shimon Kogan and Richard Lowery). Journal of Finance 68: 1937-1960, 2013.

Libertarian Paternalism, the Production of Knowledge, and Financial Decision-Making (with Simon Gervais and Gustavo Manso). Review of Financial Studies 26: 2204-2228, 2013. 

Disagreement and Asset Prices (with Francis Longstaff and Kyle Matoba). Journal of Financial Economics 114: 226-238, 2014.

Millennial-Style Learning: Search Intensity, Decision-Making, and Information-Sharing (with Li Jiang and Stephen Spiller). Forthcoming in Management Science.

Accepted at Management Science.

Search Fatigue (with Florian Ederer)
Accepted at Review of Industrial Organization.         

Work in Progress

Social Media, Fake News, and Divisiveness in the Post-Truth Era (with Jiaru Bai and David Hirshleifer).

Bad Apples and Toxic Teams

Basel Games

Political Contributions and Industry Competition

Information Contests and their Success Functions