Why are aggregate equity payouts pro-cyclical?

We use two general equilibrium models to explain why changes in the external economic environment result in pro-cyclical aggregate dividend payout behavior. Both models that we consider endogenize low elasticity of investment. The first model incorporates capital adjustment costs, while the second one assumes that risk-averse managers maximize their own objective function rather than shareholder wealth. We show that, while both models generate pro-cyclical aggregate dividends, a feature consistent with the observed business-cycle pattern of payouts from well-diversified portfolios, the second model provides a more likely explanation for this effect. Our findings emphasize the importance of incorporating agency conflicts when considering the relationship between the external economic environment and the financial behavior of businesses.

Public attitudes on the ethics of deceptively planting false memories to motivate healthy behavior

Researchers have proposed that planting false memories could have positive behavioral consequences. The idea of deceptively planting “beneficial” false memories outside of the laboratory raises important ethical questions, but how might the general public appraise this moral dilemma? In two studies, participants from the USA and UK read about a fictional “false-memory therapy” that led people to adopt healthy behaviors. Participants then reported their attitudes toward the acceptability of this therapy, via scale-rating (both studies) and open-text (Study 2) responses. The data revealed highly divergent responses to this contentious issue, ranging from abject horror to unqualified enthusiasm. Moreover, the responses shed light on conditions that participants believed would make the therapy less or more ethical. Whether or not deceptively planting memories outside the lab could ever be justifiable, these studies add valuable evidence to scientific and societal debates on neuroethics, whose relevance to memory science is increasingly acute.