Senior Fellows/Fellows

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Senior Fellows/Fellows

Real Estate Shocks and Financial Advisor Misconduct

Stephen G. DIMMOCK, William C. GERKEN, Tyson D. VAN ALFEN
We test whether household wealth shocks affect professional misconduct by financial advisors. We use a panel of advisors’ home addresses and examine within-advisor variation relative to other advisors who work at the same firm and live in the same ZIP code. We show that advisors increase miscon...
Keywords: Financial advisors, Brokers, Financial misconduct, Fraud, Household finance, Real estate, bankruptcy
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Household Portfolio Underdiversification and Probability Weighting: Evidence from the Field

Stephen G. DIMMOCK, Roy KOUWENBERG, Olivia S. MITCHELL, Kim PEIJNENBURG
We test the relation between probability weighting and household portfolio choice in a representative household survey, using custom-designed incentivized lotteries. On average, people display Inverse-S shaped probability weighting, overweighting the small probabilities of tail events. As theory pre...
Keywords: Household Finance, portfolio underdiversification, probability weighting, rank dependent utility, cumulative prospect theory, salience theory, household portfolio puzzles, stock market participation
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Senior Fellows/Fellows

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Senior Fellows/Fellows

The Endowment Model and Modern Portfolio Theory

Stephen G. DIMMOCK, Neng WANG, Jinqiang YANG
We develop a dynamic portfolio-choice model with illiquid alternative assets to analyze conditions under which the “Endowment Model,” used by some large institutional investors such as university endowments, does or does not work. The alternative asset has a lock-up, but can be voluntarily liqui...
Keywords: endowment model, portfolio choice, liquidity, modern portfolio theory, asset allocation, alternative assets
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Machine Learning Approaches to Facial and Text Analysis: Discovering CEO Oral Communication Styles

Prithwiraj (Raj) CHOUDHURY, Dan WANG, Natalie A. CARLSON, Tarun KHANNA
The advent of machine learning (ML) tools presents researchers with the possibility of using large and new datasets related to text and image repositories. In this paper, we document how a novel synthesis of three methods—(1) unsupervised topic modeling of textual data to generate a new measure of...
Keywords: machine learning, topic modeling, facial image recognition, CEO communication, topic entropy
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Senior Fellows/Fellows

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Senior Fellows/Fellows

Do Managers Matter? A Natural Experiment from 42 R&D Labs in India

Prithwiraj (Raj) CHOUDHURY, Tarun KHANNA, Christos MAKRIDIS
We exploit plausibly exogenous variation in the staggered entry of new managers into India’s 42 public R&D labs between 1994 and 2006 to study how alignment between the CEO and middle-level managers a˙ect research productivity. We show that the introduction of new lab managers aligned with th...
Keywords: incentives, innovation, management, productivity, research and development
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