Experience Stern | Faculty & Research

Faculty Research Brief is a periodic report designed to inform the Stern community about new faculty research, new publications, awards and grants. Please send your research news to be considered for inclusion to paffairs@stern.nyu.edu.

Featured Research

What Lessons Can the Sponsored Search Markets Learn from Financial Markets?

According to Information, Operations & Management Sciences Professors Vasant Dhar and Anindya Ghose, sponsored search on the Internet is currently mispriced, because it takes time for the market to absorb new information about keywords – whether they have become more or less valuable.  Relating the nascent sponsored keyword search market to pre-algorithmic financial markets, the professors offer lessons from finance to capitalize on current market inefficiencies in order to optimize sponsored search portfolios and determine how best to price keywords.  The professors argue that the increasing availability of information about products, brands or media through user-generated content on social media platforms will increase the efficiency of sponsored search markets over time, just as information technology has created efficiency in financial markets.  They suggest a new framework to break down keywords into attributes that determine economic value so companies can identify opportunities to exploit the mispricing of words to increase returns on search spending.  Their research paper, entitled “Sponsored Search and Market Efficiency,” is pending publication in Information Systems Research.

“Being of Two Minds: Switching Mindsets Exhausts Self-Regulatory Resources”

Although looking at a problem from different perspectives is often desirable, repeatedly switching perspectives can actually deplete you, exhausting the resources you need to exert self-control.  Tom Meyvis, Associate Professor of Marketing and Daniel Paduano Faculty Fellow, and Anne-Laure Sellier, Clinical Assistant Professor of Marketing, with Ryan Hamilton of Emory University and Kathleen Vohs of the University of Minnesota, find through their research that people who are asked to switch mindsets subsequently show impaired self-control compared to people who maintained the same mindset, as evidenced in a reduced ability to control their emotions and reduced mental and physical perseverance.  For instance, one study examined the effect of switching cultural mindsets by asking people to switch languages.  The authors asked fluently bilingual students to fill out a survey either in their native tongue (Mandarin, Korean or Hindi), in English or switch between languages, after which the students were asked to press a hand grip.  Those who switched between languages performed worse at the physical perseverance task than those who completed the survey in one language.  For companies, this research suggests that employee performance can be improved by reducing the need to switch mindsets – for instance by grouping activities that require a similar way of thinking or conducting meetings in the same language.  The paper was accepted for publication at Organizational Behavior and Human Decision Processes.

Stern Professors Publish New Book on Overhaul of the US Financial Regulatory System

The Dodd-Frank Act, passed this summer, provided for the most significant and controversial overhaul of the US financial regulatory system since the Great Depression.  In more than 2,000 pages, the Act outlines a 21st century framework for global finance.  Stern faculty and editors Viral Acharya, Thomas Cooley, Matthew Richardson and Ingo Walter offer an independent and critical evaluation of the Act in a new book published in November, entitled Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance.  In addition to a critique of the legislation, the book lays out a roadmap for understanding the larger implications of the Dodd-Frank Act on the US economic recovery and points out several shortcomings that prevent the legislation from providing a sound and robust regulatory structure.

Is Craigslist Killing Local Newspapers?

Assistant Professor of Management and Organizations Robert Seamans and co-author Feng Zhu of the University of Southern California study how online classifieds have affected traditional media in their study, “Technology Shocks in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers.”  Presented by Professor Seamans at the recent Networks, Electronic Commerce and Telecommunications (NET) Institute conference, hosted at NYU Stern, the paper examines classified advertising rates, subscription pricing, circulation and display advertising rates at local newspapers both before and after Craiglist was launched in their respective regions (e.g., Boston, Chicago, San Francisco).  Results indicate that when digital competition from Craigslist enters a market, local newspapers in the region with classified editors experience a decrease in classified advertising rates, an increase in subscription prices, a decrease in circulation and a decrease in display advertising rates.  These findings give some credence to claims saying that Craigslist is a “newspaper killer,” says Professor Seamans.

“The Budgetary Impact of Ending Drug Prohibition”

As state and federal governments across the country face rising deficits, PhD student Katherine Waldock and Jeffrey A. Miron of Harvard University examine one policy change – ending the war on drugs – that would generate some savings to help to reduce deficits.  The authors explain how the legalization of drugs would lead to reduced expenditure on law enforcement and increased tax revenue from the legalized sales.  The report estimates that legalized drugs would save approximately $41.3 billion per year on enforcement of prohibition and would generate some $46.7 billion in tax revenues, assuming legal drugs were taxed at comparable rates to those on alcohol and tobacco.  In advance of California’s vote in November 2010 to legalize marijuana under state law, the authors published their results on this unconventional approach to cutting the deficit. 

Awards and Presentations

Professor of Finance Stephen Figlewski has been awarded one of five annual research grants by the Institute for Quantitative Research in Finance (Q-Group) for his proposal on "What is Risk Neutral Volatility?"

Professor of Finance Viral Acharya discussed the new NYU Stern faculty book Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance, at the International Monetary Fund in September 2010; the Board of Governors of the Federal Reserve and the Bank of England, among others, in October 2010; and the Norwegian Central Bank (Norges Bank), IMF Jacques Polak Conference and the Financial Times and Credit Suisse event on “Future Regulation of the Insurance Sector,” November 2010.  Additionally, Professor Acharya presented his papers “Measuring Systemic Risk” at the Federal Reserve Bank of Chicago and “Caught Between Scylla and Charybdis? Regulating Bank Leverage When There is Rent-Seeking and Risk-Shifting” at the Federal Reserve Bank of New York Board of Governors.