Working papers authored by Tuck professors may be found via the Tuck faculty directory, personal faculty websites, or the Social Science Research Network.
All working papers are copyrighted by the authors. For permission to reproduce or to request a copy of a paper, please contact the author directly. To locate a professor's profile, visit the Faculty Directory.
Social Science Research Network: Tuck School Research Paper Series
Learning from Luck: Evidence from Mutual Fund Managers, April 2013
Abstract: This paper uses data on mutual fund managers to examine whether success breeds confidence. I find that the better a manager performs in a given year, the bolder the investments he tends to make in the following year. Next, I investigate whether observably lucky success breeds confidence as well. I isolate lucky success in two ways. First, I estimate success that is due to market-timing and not stock-picking. Second, I estimate success that is due to the market shock that followed September 11th. In both cases, I find evidence that lucky managers indeed become more confident in themselves, apparently attributing some of their good fortune to their own ability. Download PDF.
Aligning Incentives at Systemically Important Financial Institutions, March 2013
Abstract: UBS recently announced it would pay part of the bonuses of 6,500 highly compensated employees with bonds that would be forfeited if the bank does not meet its capital requirements. This memo underscores the benefits of contingent deferred compensation and makes recommendations for how such compensation should be structured at systemically important institutions. We also revise our proposal for contingent convertible bonds, explaining how these hybrid bonds can be combined with better designs for deferred compensation to reduce the need for future bailouts. Download PDF.
Trade, Education and the Shrinking Middle Class, February 2013
We develop a new model of trade in which educational institutions drive comparative advantage and determine the distribution of human capital within and across countries. Our framework exploits a multiplicity of sectors and the continuous support of human capital choices to demonstrate that freer trade can induce crowding out of the middle occupations towards the skill acquisition extremes in one country, and simultaneous expansion of middle-income industries in another. Individual gains from trade may be non-monotonic in workers' ability, and middle ability agents can lose the most from trade liberalization. Comparing trade and education policy, we nd that targeted education subsidies are more eective than taris as a means to preserve \middle class" jobs, while uniform educational subsidies have no eect. Download PDF.
Human Capital and Regional Development, April 2012
We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 97 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and possibly human capital externalities help understand the data. Download PDF.