NBER Working Papers by Christopher Cotton

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Working Papers

March 2017Competing for Capital: Auditing and Credibility in Financial Reporting
with Raphael Boleslavsky, Bruce I. Carlin: w23273
When self-interested agents compete for scarce resources, they often exaggerate the promise of their activities. As such, principals must consider both the quality of each opportunity and each agent’s credibility. We show that principals are better off with less transparency because they gain access to better investments. This is due to a complementarity between the agents’ effort provision and their ability to exaggerate. As such, it is suboptimal for principals to prevent misreporting, even if doing so is costless. This helps explain why exaggeration is ubiquitous during allocation decisions: money management, analyst coverage, private equity fundraising, and venture capital investments.
August 2014Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment
with Brent R. Hickman, Joseph P. Price: w20397
Pre-College human capital investment occurs within a competitive environment and depends on market incentives created by Affirmative Action (AA) in college admissions. These policies affect mechanisms for rank-order allocation of college seats, and alter the relative competition between blacks and whites. We present a theory of AA in university admissions, showing how the effects of AA on human capital investment differ by student ability and demographic group. We then conduct a field experiment designed to mimic important aspects of competitive investment prior to the college market. We pay students based on relative performance on a mathematics exam in order to test the incentive effects of AA, and track study efforts on an online mathematics website. Consistent with theory, AA increases...
October 2010The Gender Gap Cracks Under Pressure: A Detailed Look at Male and Female Performance Differences During Competitions
with Frank McIntyre, Joseph Price: w16436
Using data from multiple-period math competitions, we show that males outperform females of similar ability during the first period. However, the male advantage is not found in any subsequent period of competition, or even after a two-week break from competition. Some evidence suggests that males may actually perform worse than females in later periods. The analysis considers various experimental treatments and finds that the existence of gender differences depends crucially on the design of the competition and the task at hand. Even when the male advantage does exist, it does not persist beyond the initial period of competition.

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