The Existence and Persistence of a Winner’s Curse: New Evidence from the (Baseball) Field

This study takes advantage of recent developments in the measurement and valuation of individual output in the baseball labor market to (i) reassess prior evidence that this market is afflicted by the winner’s curse phenomenon and (ii) test whether bidders learn to avoid this curse over time. Though we find no evidence of negative average returns on player contracts for the earliest cohort of baseball free agents, we conclude that teams in that era failed to efficiently discount their bids in accord with available information, especially about risk. What is more, evidence from a larger sample of players signed in the late 1990s shows that teams have continued to overvalue inconsistent free agents and failed to limit their bids to conform to players’ lower values in small markets. This is consistent with experimental evidence that finds bounded-rational behavior when bidders are faced with complex valuation problems involving multiple elements.market efficiency, bounded rationality, overbidding

Local Currency Bond Markets

We analyze the development of 49 local bond markets. Our main finding is that policies and laws matter: Countries with stable inflation rates and strong creditor rights have more developed local bond markets and rely less on foreign-currency-denominated bonds. The results suggest that "original sin" is a misnomer. Emerging economies are not inherently dependent upon foreign-currency debt. Rather, by improving policy performance and strengthening institutions they may develop local currency bond markets, reduce their currency mismatch, and lessen the likelihood of future crises.

Field and Online Experiments on Procrastination and Willpower

Self-control problems have recently received considerable attention from economic theorists. We conducted two studies to test the benefits of externally imposed deadlines and how willpower depletion affects behavior, providing some of the first data in these areas. Each study involved a behavioral intervention designed to affect performance. We find that for a lengthy task, regular deadlines neither reduce procrastination nor increase completion rates. Second, a willpower-depleting task reduces initial effort but increases overall task-completion rates. Our results help to inform ongoing efforts to understand and model procrastination, willpower and commitment mechanisms.Experiment, Behavioral Interventions, Procrastination, Willpower

Local Currency Bond Markets

This paper analyzes the development of 49 local bond markets. The main finding is that policies and laws matter: countries with stable inflation rates and strong creditor rights have more developed local bond markets and rely less on foreigncurrency-denominated bonds. The results suggest that "original sin" is a misnomer. Emerging economies are not inherently dependent on foreign currency debt. Rather, by improving policy performance and strengthening institutions, they may develop local currency bond markets, reduce their currency mismatch, and lessen the likelihood of future crises. Copyright 2006, International Monetary Fund

Testing Fair Wage Theory

Fairness considerations often are invoked to explain wage differences that appear unrelated to worker characteristics or job conditions, but non-experimental tests of fair wage models are rare and weak because of the limits of available market-generated data. In particular, such data rarely permit researchers to (a) identify suitable reference points that employees and employers might use in determining what is fair and (b) control for employees’ marginal output and its value. This study utilizes a unique dataset from the baseball labor market that solves both problems. We find no support for fair wage theory in this market. We also find that fairness premia can be illusory: Wages appear to be adjusted upward for reasons of fairness in regressions that control for variation in individuals’ physical output, but such premia evaporate when the value of that output (which can be market- or firm-specific) is held constant. This suggests that avoiding proxy measures of workers’ marginal revenue products in wage studies might reduce the number of labor market "anomalies" economists must resolve.fairness, efficiency wages, wage differentials

Foreign Participation in Local Currency Bond Markets

Countries that cannot attract foreigners to invest in their local currency bonds run the risk of currency mismatches that can result in painful crises. We analyze foreign participation in the bond markets of over 40 countries. Bond markets in less developed countries have returns characterized by high variance and negative skewness, factors that we show are eschewed by U.S. investors. While results based on a three-moment CAPM indicate that it is diversifiable idiosyncratic risk that U.S. investors shun, our analysis suggests that countries can improve foreign participation by reducing macroeconomic instability.

Automating Coreference: The Role of Annotated Training Data

We report here on a study of interannotator agreement in the coreference task as defined by the Message Understanding Conference (MUC-6 and MUC-7). Based on feedback from annotators, we clarified and simplified the annotation specification. We then performed an analysis of disagreement among several annotators, concluding that only 16% of the disagreements represented genuine disagreement about coreference; the remainder of the cases were mostly typographical errors or omissions, easily reconciled. Initially, we measured interannotator agreement in the low 80s for precision and recall. To try to improve upon this, we ran several experiments. In our final experiment, we separated the tagging of candidate noun phrases from the linking of actual coreferring expressions. This method shows promise - interannotator agreement climbed to the low 90s - but it needs more extensive validation. These results position the research community to broaden the coreference task to multiple languages, and possibly to different kinds of coreference.Comment: 4 pages, 5 figures. To appear in the AAAI Spring Symposium on Applying Machine Learning to Discourse Processing. The Alembic Workbench annotation tool described in this paper is available at http://www.mitre.org/resources/centers/advanced_info/g04h/workbench.htm