2/16/2022 — As of 2019, salary history bans were enacted by 17 states and Puerto Rico with the stated purpose of reducing the gender pay gap. We argue that salary history bans may negatively affect wages as employers lose an informative signal of worker productivity. We empirically evaluate these laws using a large panel dataset of disaggregated wages covering all public-sector employees in 36 states and find, on average, that salary history bans lead to a 3% decrease in new-hire wages.

• KEYWORD(S):
• organizational behavior
• strategy and entrepreneurship

8/1/2021 — The psychology literature documents that individuals derive current utility from their beliefs about future events. We show that, as a result, investors in financial markets choose to disagree about both private and price information. When objective price informativeness is low, each investor dismisses the private signals of others and ignores price information. In contrast, when prices are sufficiently informative, heterogeneous interpretations arise endogenously: most investors ignore prices, while the rest condition on it.

• KEYWORD(S):
• finance

7/1/2021 — Financial markets reveal information which firm managers can utilize when making equity value-enhancing investment decisions. However, for firms with risky debt, such investments are not necessarily socially efficient. Despite this friction, we show that learning from prices improves investment efficiency.

• KEYWORD(S):
• finance

9/5/2020 — We characterize how wishful thinking affects the interpretation of information in economies with strategic and external effects. While players always choose to exhibit overconfidence in private information, their interpretation of public information depends on how non-fundamental volatility affects payoffs. When volatility increases payoffs, players may endogenously disagree: some under-react to public news, while others overreact.

• KEYWORD(S):
• strategy and entrepreneurship

8/1/2022 — The data-generating process of productivity growth includes both trend and business-cycle shocks, generating many counterfactuals for prices under full-information. In practice, agents cannot immediately distinguish between the two shocks, leading to "rational confusion": each shock inherits properties of its counterpart.

• KEYWORD(S):
• asset pricing
• finance