Publications

We study a retirement savings plan with a default contribution rate of 12% of income, which is much higher than previously studied defaults. Twenty-five percent of employees had not opted out of this default 12 months after hire; a literature review finds that the corresponding fraction in plans with lower defaults is approximately one-half. Because only contributions above 12% were matched by the employer, 12% was likely to be a suboptimal contribution rate for employees. Employees who remained at the 12% default contribution rate had average income that was approximately one-third lower than would be predicted from the relationship between salaries and contribution rates among employees who were not at 12%. Defaults may influence low-income employees more strongly in part because these employees face higher psychological barriers to active decision making.

Bayer AG is a German multinational pharmaceutical and life sciences company founded in 1863. It operates globally in over 90 countries with approximately 100,000 employees as of 2024. Bayer is structured into three main business segments: Pharmaceuticals, Consumer Health, and Crop Science, with significant global operations and an extensive patent portfolio. The company is a leader in agricultural products, prescription medicines, and over-the-counter health products. It also focuses on innovative solutions for healthcare and agricultural challenges.

The current dilemma for students to address are issues related to Bayer’s transition to a new operating model called Dynamic Shared Ownership (DSO). This model, introduced under the leadership of CEO Bill Anderson, aims to flatten the corporate hierarchy and create a nimbler, customer-centric organization. The transition involves removing the existing hierarchical structure, which previously consisted of 12 management layers, and replacing it with self-managed teams. This structural change was referred to internally as the "hardware."

The initial steps under DSO included substantial organizational redesign, involving layoffs and the establishment of self-managed teams. The Board of Management successfully halved the number of management layers to five or six and replaced thousands of middle managers with self-managed teams. A complementary aspect of DSO, labeled the "software," focused on fostering cultural changes to promote new mindsets, norms, and behaviors among Bayer’s nearly 100,000 employees.

Notwithstanding several early wins, the Board of Management is now grappling with implementing new talent management and personnel policies that align with the DSO model. Existing HR processes and systems, which are designed for a hierarchical organization, need to be reinvented. Questions about compensation, career pathing, and performance metrics must be addressed to ensure these new systems support the DSO framework effectively.

A critical element of word of mouth (WOM) or buzz marketing is to identify seeds, often central actors with high degree in the social network. Seed identification typically requires data on the relevant network structure, which is often unavailable. We examine the impact of WOM seeding strategies motivated by the friendship paradox, which can obtain more central nodes without knowing network structure. Higher degree nodes may be less effective as seeds if these nodes communicate less with neighbors or are less persuasive when they communicate; therefore, whether friendship paradox–motivated seeding strategies increase or reduce WOM and adoption remains an empirical question. We develop and estimate a model of WOM and adoption using data on microfinance adoption across village social networks in India. Counterfactuals show that the proposed strategies with limited seeds are about 13%–30% more effective in increasing adoption relative to random seeding. These strategies are also on average 5%–11% more effective than the firm’s leader seeding strategy. We also find these strategies are relatively more effective when we have fewer seeds.

This chapter reviews major theories of emotion and decision making, concentrating on developments within the disciplines of psychology, economics, and decision science. These theories naturally cluster into two sets of theories – one set that views emotional valence (i.e., positivity versus negativity) as the primary factor for predicting decision outcomes, and a second set of theories that views valence as one of multiple factors for making predictions. Often known as “emotion-specific models”, theories in this latter set propose that emotions of the same valence can have opposing (rather than similar) effects on certain decisions. After describing strengths and weaknesses of each approach, the chapter offers a review of the Emotion-Imbued Choice model (EIC) – a unified, meta-level model of emotion and decision making.

How does market power in the corporate banking sector influence the effects of interest rate cap policies on credit allocation? We study this question using administrative credit registry data in Bangladesh, where the Central Bank capped the interest rate on corporate loans at 13% in 2009, relative to a pre-reform average interest rate of 14.5%. We apply a difference-in-differences design with variation in pre-regulation, branch-level interest rates as an exposure measure and find that a one percentage point cap-induced drop in rates increased lending amounts by 30% over the two years of the cap regime. This increase in lending is not driven by banks’ costs to supplying credit, as proxied by the riskiness of the borrower pool or deposit funding costs. Our results point to substantial credit under-provision due to banks’ market power in an emerging markets context, even in the presence of relationship lending.

What is keeping Lidl, Europe’s preeminent grocery chain, from gaining similar success in the U.S?

Upon entry to the U.S. market in 2017, Lidl US aspired to open 1,000 stores in its first years. But the company was unable to attract US consumers. By 2024, Lidl had managed to open fewer than 200 stores, capturing less than 1% of the market. To right the expansion effort in 2023, Joel Rampoldt became Lidl US’s fourth president. In 2024, he faced critical issues in the selection of store locations, assortment, customer relationship management, and effectively communicating Lidl’s value proposition in a crowded and competitive market.

When Kinya Seto became CEO of LIXIL in 2016, he faced two major challenges: integrating a workforce spread across several acquired brands and differentiating LIXIL in a housing and water technology industry where products were seen as commodities. This case explores how LIXIL developed and activated its corporate purpose—"To Make Better Homes a Reality for Everyone, Everywhere"—as a unifying and strategic force. The purpose became a guiding “North Star,” brought to life through an ambitious new business unit focused on delivering low-cost, eco-friendly toilets to underserved communities around the world. This purpose-driven approach also helped unite employees, spark innovation, and address the challenge of product commoditization.

Environmental jolts can trigger more conducive conditions for driving change in organizations. However, punctuated equilibrium theories of organizational change concentrate on top managers’ implementation of de novo radical changes after jolts. Existing research has not examined frontline-driven, incremental change efforts during these periods of disrupted stasis, despite the value of frontline change ideas. We develop a process model to explain how and when those on an organization’s front lines can leverage a jolt to opportunistically implement long-desired change ideas in ways that promote their retention. We conducted a two-year qualitative field study at a hospital during the Covid-19 pandemic, examining the trajectories of 33 premeditated change ideas raised by frontline staff. By comparing ideas that persisted to become part of normal operations with those that failed to be selected or retained, we identified practices and conditions that promoted the selection and retention of frontline change ideas. Our study suggests that frontline change advocates can seed the long-term retention of “shovel-ready” ideas—as opposed to de novo ideas—after a jolt by rapidly and opportunistically deploying a novel set of practices before the brief window of opportunity created by lessened constraints and increased managerial receptivity closes. Prior theories of change largely assume frontline-driven change to be slow and continuous, proceeding in a one-off fashion; we explain how and when frontline change can instead occur in rapid, opportunistic bursts. This study advances theories of punctuated equilibrium and bottom-up change in organizations by unearthing an alternative way that change can be intentionally accomplished in organizations.

We study the socially optimal level of illiquidity in an economy populated by house- holds with taste shocks and present bias with naive beliefs. The government chooses mandatory contributions to accounts, each with a different pre-retirement withdrawal penalty. Collected penalties are rebated lump sum. When households have homoge- neous present bias, β, the social optimum is well approximated by a single account with an early-withdrawal penalty of 1 − β. When households have heterogeneous present bias, the social optimum is well approximated by a two-account system: (i) an account that is completely liquid and (ii) an account that is completely illiquid until retirement.

A common-sense moral intuition is that bad acts should be condemned according to severity. Yet seven experiments (N = 6,075 U.S. adults) show that the extent to which people differentiate between transgressions hinges on the direction of comparison. When scaling up from a less severe transgression to a more severe one, people readily express stronger condemnation of the worse transgression. But when scaling down from a more severe transgression to a less severe one, they differentiate less, often condemning the lesser transgression just as strongly as one that is transparently worse. Indicating that one transgression is less bad than another can be construed as downplaying such transgressions, signaling bad moral character. Supporting this account, the asymmetry is larger for judgments that implicate moral character and for transgressions that seem especially important to condemn. Observers’ moral-character judgments reveal a similar pattern, suggesting that the asymmetry is reinforced by social incentives.

Over the first two decades of the 21st century, Rio Tinto, a 150-year-old global mining leader, faced significant volatility as it navigated an increasingly globalized and financialized economy. Mining companies, heavily reliant on commodity prices, struggled after the 2008 Great Recession, leading to cost-cutting measures and changes in how they managed their global operations.

In May 2020, Rio Tinto legally blasted two sacred, 46,000-year-old caves at Juukan Gorge in Western Australia to access $135 million worth of iron ore. The decision deeply distressed the Traditional Owners, who had long opposed the action, and sparked widespread criticism from the government, investors and communities. The fallout led to the resignation of Rio Tinto’s CEO, two senior executives, and the board chair. Jakob Stausholm, formerly CFO, became CEO in January 2021. The case examines how Stausholm addressed the dilemma and how a company that loses its social license to operate can take steps to regain it.

Online platforms are rife with racial discrimination, but current interventions focus on employers, rather than customers. We propose a customer-facing solution: changing to a two-point rating scale (dichotomization). Compared with the ubiquitous five-star scale, we argue that dichotomization reduces modern racial discrimination by focusing evaluators on the distinction between ‘good’ and ‘bad’ performance, thereby reducing how personal beliefs shape customer assessments. Study 1 is a quasi-natural experiment on a home-services labour platform (n = 69,971) in which the company exogenously changed from a five-star scale to a dichotomous scale (thumbs up or thumbs down). Dichotomization eliminated customers’ racial discrimination whereby non-white workers received lower ratings and earned 91 cents for each US dollar paid to white workers for the same work. A pre-registered experiment (study 2, n = 652) found that the equalizing effect of dichotomization is most prevalent among evaluators holding modern racist beliefs. Further experiments (study 3, n = 1,435; study 4, n = 528) provide evidence of the proposed mechanism, and eight supplementary studies support measurement and design choices. Our research offers a promising intervention for reducing customers’ subtle racial discrimination in a large section of the economy and contributes to the interdisciplinary literature on evaluation processes and racial inequality.

Operations research, originating during World War II, is the scientific study of operations aimed at improving decision-making and organizational performance. Initially focused on military logistics, its scope has expanded to address diverse operational problems in business, government, and non-profit sectors. These include scheduling, capacity planning, routing, and resource allocation. Through mathematical modeling and analysis, operations research seeks not just to describe but to optimize operations by aligning them with organizational goals such as maximizing profit, minimizing costs, or enhancing effectiveness. The field has evolved from simple problem identification to complex mathematical modeling, emphasizing the importance of framing the right problem within a well-understood system context. Applied operations research assumes that the identified problem can be modeled mathematically, that the models and assumptions are valid, and that organizational objectives and constraints are clearly defined and quantifiable. The ultimate aim is actionable recommendations that improve real-world decision-making. Grounded in the belief in mathematical rigor, operations research integrates objectives and constraints to deliver feasible solutions. By leveraging analytical tools, it supports better decision-making, ensuring that operations are not only efficient but also aligned with strategic priorities, making it a practical and impactful discipline across sectors.

Consensus analyst target prices are widely available online at no cost to investors. In this paper we examine how the amount of dispersion in the individual target prices comprising the consensus affects the predictive association between the consensus target price and future returns. We find that returns implied by consensus target prices and realized future returns are positively correlated when dispersion is low, but they become highly negatively correlated when dispersion is high. Further analyses suggest that the differing effect of dispersion stems from incentive-driven staleness in price targets by some analysts after bad news. As a stock performs poorly and some analysts are slow to update their target prices, dispersion increases, and the consensus target price becomes too high. This has important implications for how consensus analyst target prices should inform investment decisions. We show that a hedge strategy taking a long (short) position in stocks with the highest predicted returns among stocks with the lowest (highest) dispersion earns more than 11% annually. Finally, we show that the negative correlation between consensus-based predicted returns and future realized returns for high-dispersion stocks exists mainly for stocks with high retail interest, suggesting that unsophisticated investors are misled by inflated target prices that are available freely online.

The world has seen a stunning rise in the willingness of great powers to use their trade and financial relationships for geopo- litical ends. This rise of “Geoeconomics” has the potential to reshape the interna- tional trade and financial system. Geoe- conomic policies include not only sanctions but also the strategic use of export controls, efforts to reshape supply chains for secu- rity purposes, the provision of foreign aid to secure political alignment, and the en- couragement or pressure on domestic and foreign firms to alter their business rela- tionships. While the foundation of a na- tion’s geoeconomic power is its economic strength, size and connections alone do not automatically translate into geoeconomic power. Instead, governments seeking to project geoeconomic power abroad need to be able to credibly co-opt or coerce their do- mestic firms and citizens, and perhaps crit- ical foreign allies, to take part in this power projection. Achieving this involves navigat- ing a range of political economy constraints at home, including legal restrictions, do- mestic political objectives, interest groups and other forces that limit a government’s ability to exert its influence. An important question for geoeconomic power projection is how far a government can push its own firms or allies to act against their private interests in pursuit of the country’s geopo- litical goals.

The founders of Warby Parker had a clear vision of the kind of company they wanted to build: a novel business model that would disrupt a long-entrenched industry. The company’s values would create a culture that the founders themselves—and, they hoped, many others—would find meaningful and even fun. Their social impact mission wouldn’t be a philanthropic afterthought but an integral part of the business’s core. Purpose and profit would be pursued simultaneously, along with a commitment to building mutually beneficial relationships with customers, partners, communities, and other key stakeholders. They debated these and other critical details two years before the company was operational or even had a name.

The case examines the founders’ original business design for Warby Parker—a holistic approach that aligned and integrated purpose, a values-based culture, and business strategy with a commitment to building trusted relationships with stakeholders. The case also explores the actions taken by leadership to preserve this design as the company scaled, adapted and, ultimately, became a public corporation.

Consideration set models generalize discrete-choice models by relaxing the assumption that consumers consider all available options. Determining which options were considered has previously required either survey data or restrictions on how attributes affect consideration or utility. We provide an alternative route. In full-consideration models, choice probabilities satisfy a symmetry property analogous to Slutsky symmetry in continuous-choice models. This symmetry breaks down in consideration set models when changes in characteristics perturb consideration. We show that consideration probabilities are constructively identified from the resulting asymmetries. We validate our approach in a lab experiment where consideration sets are known and then apply our framework to study a “smart default” policy in Medicare Part D, wherein consumers are automatically reassigned to lower-cost prescription drug plans with the option of opting out. Full-consideration models imply that such a policy will be ineffective because consumers will opt out to avoid switching costs. Allowing for inattention, we find that defaulting all consumers to lower-cost options produces negligible welfare benefits on average, but defaulting only consumers who would save at least $300 produces large benefits.

Yale Athletics operates a comprehensive and diverse program including 35 NCAA Division I varsity sports, intramurals, and club sports, all coordinated under the direction of Victoria M. "Vicky" Chun, the Thomas A. Beckett Director of Athletics. The department oversees significant athletic facilities such as Payne Whitney Gymnasium, the Yale Bowl, the Yale Golf Course, and additional specialized fields and rinks. This operation is underpinned by approximately 170 full-time employees who manage athletic medicine, business operations, compliance, event management, sports performance, student-athlete development, sports performance, communication, marketing, and community engagement.

Current opportunities for Yale Athletics include:

1. Corporate Sponsorships: Yale Athletics aims to optimize its corporate sponsorship portfolio by analyzing current offerings and improving how media and sponsorships are packaged and priced. This area is crucial for securing financial support and enhancing the advertising value for partners.

2. Ticketing and Price Analytics: The department is reevaluating its ticket pricing strategies to both increase game attendance and revenue. Comparative market research is being used to consider pricing strategies.

3. Community Outreach and Fan Engagement:  Post-pandemic, there is an effort to attract more fans from the local community. Yale Athletics is working on a cohesive outreach strategy and defining goals for fan attendance, balancing innovative marketing practices with Yale’s mission.

4. Employee Outreach and Engagement: Enhancing internal engagement is a priority. Despite efforts to keep the university’s large on-campus population informed about sports events, there is a focus on leveraging new technologies, creating better game-day experiences, and ensuring effective communication.

5. Artificial Intelligence:  Exploring the use of AI technologies to improve operational efficiency and service delivery is on the agenda. This involves utilizing AI for better customer service, advanced market research, and provide further support of administrative functions.

These challenges reflect Yale Athletics' commitment to maintaining excellence and fostering a vibrant sports environment within the university and community.

This paper develops a theory-based, explainable deep learning convolutional neural network (CNN) classifier to predict the time-varying emotional response to music. We design novel CNN filters that leverage the frequency harmonics structure from acoustic physics known to impact the perception of musical features. Our theory-based model is more parsimonious, but it provides comparable predictive performance with atheoretical deep learning models while performing better than models using handcrafted features. Our model can be complemented with handcrafted features, but the performance improvement is marginal. Importantly, the harmonics-based structure placed on the CNN filters provides better explainability for how the model predicts emotional response (valence and arousal) because emotion is closely related to consonance—a perceptual feature defined by the alignment of harmonics. Finally, we illustrate the utility of our model with an application involving digital advertising. Motivated by YouTube’s midroll ads, we conduct a laboratory experiment in which we exogenously insert ads at different times within videos. We find that ads placed in emotionally similar contexts increase ad engagement (lower skip rates and higher brand recall rates). Ad insertion based on emotional similarity metrics predicted by our theory-based, explainable model produces comparable or better engagement relative to atheoretical models.