Entrepreneur's Overconfidence, Private Benefits and the Market Performance of the Firm

Many firms around the world are managed and partially owned by entrepreneurs. These entrepreneurs hold under diversified portfolios and, therefore, bear idiosyncratic risk in addition to systematic risk. To compensate the additional risk borne, they extract private benefits. In this paper, we analyse how an entrepreneur's overconfidence affects the market performance of the firm, through the channel of private benefits. We show that two dimensions of overconfidence, namely overestimation of future cash-flows and underestimation of idiosyncratic risk (called miscalibration), have opposite effects on the private benefits extracted by the entrepreneur. As a consequence, firms managed and partially owned by overconfident entrepreneurs can deliver overperformance or underperformance, depending on the prevalence of overestimation or miscalibration of the beliefs of the entrepreneur.

Determinants of Decentralization within the Firm: Some Empirical Evidence from Spanish Small and Medium- Sized Enterprise

This paper examines empirically the determinants of decentralization of decision- making in the firm for small and medium-sized enterprises (SMEs) that tend to be highly centralized. By decentralization of decisions we mean the delegation of decision rights from the owner or manager to the plant supervisor or even to floor workers. Our findings show that the allocation of authority to basic workers or a team of workers depends on firm characteristics such as firm size, the use of internal networks or the number of workplaces, and workers characteristics, in particular, the composition of the laborforce in terms of education and seniority and whether or not workers receive pay incentives. External factors such as the intensity of competition and the firm s export intensity are also important determinants of the allocation of authority.

Contextual effects on political behavior

In her post-doctoral research stay, Aina Gallego has conducted several research projects with the overarching theme of identifying the effects of contexts on political behavior. She has examined the effects of institutions, the economic situation, or local contexts on outcomes such as voter turnout, vote choice, and positions on salient issues. As detailed below, this work has been published in several journal articles in leading Political Science journals such as Comparative Political Studies, Political Behavior, and Electoral Studies (see attached documents). She has a forthcoming book with Cambridge University Press, the most prestigious book press in Political Science.She has also published book chapters and has several working papers. In addition to conducting her research, Aina has received extensive training in both substantive areas and research methods. She has participated fully in the Department’s academic life by attending seminars and engaging in research projects with other members of the Department.

Innovation and firm growth: Does firm age play a role?

This paper explores the relationship between firm growth, innovation and firm age. We hypothesize that young firms undertake riskier innovation activities and are more oriented towards employment growth than towards harvesting returns in the form of sales growth. Using an extensive sample of Community Innovation Survey for the period 2004-2010, we apply quantile regressions and a Heckman sample selection technique to study the impact of R&D activities on firm growth according to firm age. Our results show that R&D intensity is positively associated with firm growth. However, for young firms R&D shows an increasing influence across the quantiles, while for old firms R&D shows a stable or perhaps decreasing effect over the quantiles. Firm age shows a significant negative impact among young firms, while for the sample of old firms the impact of firm age becomes non-significant. Our Heckman estimations show the evolution of the impact of the R&D on firm growth confirming a significant impact on sales and productivity growth, while the impact is negligible for employment growth. Keywords: firm age, firm growth, innovation, quantile regression. JEL CODES: L25, L20

Multimarket contact externalities: the effect of rival's multimarket contacts on focal firm performance

Given that firms develop their activities in a network of multiple players, interfirm rivalry is not only a matter of direct competitors, but also of indirect competition. In spite of this, the literature on competitive dynamics tends to focus on analyzing rivalry as an exclusive function of the competitive relationship between a focal firm and its direct rivals. In this article, we extend competitive dynamics literature by considering how focal firms are affected by the relationships of their rivals with third-party firms. Specifically, we study the effect that the multimarket contacts of rivals produces on the performance of the focal firm. Additionally, we incorporate the idea that there are different strategic options for operating in an industry that affect the intensity of multimarket contact externalities. Our results show that multimarket contact among firms causes externalities that indirectly affect firms that are not directly involved in this competitive relationship. We find that multimarket contact externalities differ between and within strategic groups.

Essential role of the N-terminal region of TFII-I in viability and behavior

Background: GTF2I codes for a general intrinsic transcription factor and calcium channel regulator TFII-I, with high and ubiquitous expression, and a strong candidate for involvement in the morphological and neuro-developmental anomalies of the Williams-Beuren syndrome (WBS). WBS is a genetic disorder due to a recurring deletion of about 1,55-1,83 Mb containing 25-28 genes in chromosome band 7q11.23 including GTF2I. Completed homozygous loss of either the Gtf2i or Gtf2ird1 function in mice provided additional evidence for the involvement of both genes in the craniofacial and cognitive phenotype. Unfortunately nothing is now about the behavioral characterization of heterozygous mice. Methods: By gene targeting we have generated a mutant mice with a deletion of the first 140 amino-acids of TFII-I. mRNA and protein expression analysis were used to document the effect of the study deletion. We performed behavioral characterization of heterozygous mutant mice to document in vivo implications of TFII-I in the cognitive profile of WBS patients. Results: Homozygous and heterozygous mutant mice exhibit craniofacial alterations, most clearly represented in homozygous condition. Behavioral test demonstrate that heterozygous mutant mice exhibit some neurobehavioral alterations and hyperacusis or odynacusis that could be associated with specific features of WBS phenotype. Homozygous mutant mice present highly compromised embryonic viability and fertility. Regarding cellular model, we documented a retarded growth in heterozygous MEFs respect to homozygous or wild-type MEFs. Conclusion: Our data confirm that, although additive effects of haploinsufficiency at several genes may contribute to the full craniofacial or neurocognitive features of WBS, correct expression of GTF2I is one of the main players. In addition, these findings show that the deletion of the fist 140 amino-acids of TFII-I altered it correct function leading to a clear phenotype, at both levels, at the cellular model and at the in vivo model.

BDNF impairment in the hippocampus is related to enhanced despair behavior in CB1 knockout mice

Stress can cause damage and atrophy of neurons in the hippocampus by deregulating the expression of neurotrophic factors that promote neuronal plasticity. The endocannabinoid system represents a physiological substrate involved in neuroprotection at both cellular and emotional levels. The lack of CB1 receptor alters neuronal plasticity and originates an anxiety-like phenotype in mice. In the present study, CB1 knockout mice exhibited an augmented response to stress revealed by the increased despair behavior and corticosterone levels showed in the tail suspension test and decreased brain derived neurotrophic factor (BDNF) levels in the hippocampus. Interestingly, local administration of BDNF in the hippocampus reversed the increased despair behavior of CB1 knockout mice, confirming the crucial role played by BDNF on the emotional impairment of these mutants. The neurotrophic deficiency seems to be specific for BDNF since no differences were found in the levels of NGF and NT-3, two additional neurotrophic factors. Moreover, BDNF impairment is not related to the activity of its specific receptor TrkB or the activity of the transcription factor CREB. These results suggest that the lack of CB1 receptor originates an enhanced response to stress and neuronal plasticity by decreasing BDNF levels in the hippocampus that lead to impairment in the responses to emotional disturbances.

Do pornographic websites influence boys' sexual behavior?

Purpose: To compare the sexual behavior of adolescent males who do and do not watch pornographic websites. Methods: This study was presented as a school survey. Data were drawn from the 2002 Swiss Multicenter Adolescent Survey on Health (SMASH02) database, a survey including 7,548 adolescents age 16-20. The setting was post-mandatory schools in Switzerland. A total of 2,891 male students who connected to the internet in the last 30 days were enrolled and distributed into two groups: boys who deliberately watched pornographic websites in the last 30 days (n ¼ 942; 33%) and boys who did not (n ¼ 1,949; 67%). Socio-demographic characteristics; frequency of connection to the internet; sexual behavior parameters (having a girlfriend and if yes, for more or less than 6 months; having had sexual intercourse; age at first sexual intercourse; use of a condom at last sexual intercourse; number of sexual partners; having made a partner pregnant). Results: A logistic regression was performed using STATA 9.2. The only significant socio-demographic variable was having a low socioeconomic status (adjusted odds ratio [AOR] 1.66); no difference was found for age and academic track between the two groups. Boys who watch pornographic websites were also significantly more likely to connect frequently to the internet (one day a week: AOR 1.75; several days a week: AOR 2.36; every day: AOR 3.11), to have had sexual intercourse (AOR 2.06), and to have had their first sexual intercourse before age 15 (AOR 1.48). The stability of the relationship with their girlfriend did not appear to have any influence on the search for pornography on the internet. Conclusions: About one third of boys in our sample report having accessed pornographic websites in the last 30 days, a proportion similar to other studies. Watching such websites increases with the frequency of connection to the internet and seems to be correlated with an earlier sexual activity debut among adolescent males. However, having had first sexual intercourse before age 15 is the only sexual risk behavior that seems to be increased when watching pornographic websites among boys. Further studies should address the causality of this correlation and the factors influencing the search for pornography on the web among boys, in order to explore some new ways of prevention about sexual risk behaviors. Sources of Support: The SMASH02 survey was carried out with the financial support of the Swiss Federal Office of Public Health and the participating cantons.

Managing Quality under Heterogeneous Consumer Demand and Product Quality, October 2005

Based on accepted advances in the marketing, economics, consumer behavior, and satisfaction literatures, we develop a micro-foundations model of a firm that needs to manage the quality of a product that is inherently heterogeneous in the presence of varying customer tastes or expectations for quality. Our model blends elements of the returns to quality, customer lifetime value, and service profit chain approaches to marketing. The model is then used to explain several empirical results pertaining to the marketing literature by explicitly articulating the trade-offs between customer satisfaction and costs (including opportunity costs) of quality. In this environment firms will find it optimal to allow some customers to go unsatisfied. We show that the relationship between the expected number of repeated purchases by an individual customer is endogenous to the choice of quality by the firm, indicating that the number of purchases cannot be chosen freely to estimate a customer’s lifetime value.

Do Mice Habituate to "Gentle Handling?" A Comparison of Resting Behavior, Corticosterone Levels and Synaptic Function in Handled and Undisturbed C57BL/6J Mice.

Study Objectives: "Gentle handling" has become a method of choice for 4-6 h sleep deprivation in mice, with repeated brief handling applied before sleep deprivation to induce habituation. To verify whether mice do indeed habituate was assess how 6 days of repeated brief handling impact on resting behavior, on stress, and on the subunit content of N-methyl-D-aspartate receptors (NMDARs) at hippocampal synapases, which is altered by sleep loss. We discuss whether repeated handling biases the outcome of subsequent sleep deprivation.Design: Adult C5BL/6J mice, maintained on a 12 h-12 h light-dark cycle, were left undistrubed for 3 days, then handled during 3 min daily for 6 days in the middle of the light phase. Mice were continuously monitored for their resting time serum conticosterona levels and synaptic NMDAR subunit composition were quantified.Results: Handling caused a similar to 25% reduction of resting time throughtout all handling days, After six, but not after one day of handling, mice had elevated serum corticosterone levels. Six-day handling augmented the presence of the NR2A subunit of NMDARs at hippocampal synapses.Conclusion: Repeated handling induces behavoir and neurochemical alterations that are absent in undisturbed animals. The presistently reduced resting time and the delayed increase in conticosterone levels indicate that mice do not habituate to handling over a 1-week period. Handling-induced modifications bias effects of gentle handling-induced sleep deprivation on sleep homeostasis, stress, glutamate receptor composition and signaling. A standardization of sleep deprivation procedures involving gengle handling will be important for unequivocally specifying how acute sleep loss affects brain function.

Frequency and effects of meeting health-behavior guidelines among adolescents

Objective: To assess the relationship between overweight status and the concomitant adherence to physical activity, daily screen time, and nutritional guidelines. Methods: Data were derived from the Swiss HBSC survey 2006. Participants (n=8130, 48.7% girls) were divided into two groups: normal-weight (n=7215, 44.8% girls), and overweight (n=915, 34.8% girls), using self-reported height and weight. Groups were compared on adherence to physical activity, screen time and nutritional guidelines. Bivariate analyses were carried out followed by multivariate analyses using normal-weight individuals as the reference category. Results: Regardless of gender, overweight individuals reported more screen time, less physical activity, and less concomitant adherence to guidelines. For boys, the multivariate analysis showed that any amount exceeding screen time recommendations was associated with increased odds of being overweight (>2-4h: adjusted odds ratio (AOR)=l .40; >4-6h: AOR=l .48; >6h: AOR=l .83). A similar relation was found for any amount below physical activity recommendations (4-6 times a week: AOR=1.67; 2-3 times a week: AOR=1.87; once a week or less: AOR=2.1). For girls, not meeting nutritional guidelines was less likely among overweight individuals (0-2 recommendations: AOR=0.54). Regardless of weight status, more than half of adolescents did not comply with any guideline and less than 2% met all 3 at the same time. Conclusions: Meeting current nutritional, physical activity and screen time guidelines should be encouraged with respect to overweight. However, as extremely low rates of concomitant adherence were found regardless of weight status, their achievability is questionable (especially for nutrition) which warrants further research to better adapt them to adolescents.