Department of Economics
Kellogg Global Hub, Room 3379
2211 Campus Drive
Evanston, IL 60208
Institutional Affiliation: Northwestern University
NBER Working Papers and Publications
|May 2019||Fiduciary Duty and the Market for Financial Advice|
with Gaston Illanes, Manisha Padi: w25861
Fiduciary duty may combat principal-agent problems in the provision of financial advice, but it may also impose costs through legal liability. We study the effects of fiduciary duty on the deferred annuity market using transaction-level data. Leveraging state-level variation in common law fiduciary duty, we find that it raises risk-adjusted returns by 25 bp without decreasing transacted volume. We develop a model of entry and advice provision, which shows that fiduciary duty operates by directly constraining low-quality advice rather than by solely increasing compliance costs. Overall, results suggest that expanding fiduciary duty would improve investor welfare.
|August 2013||Regulating Bidder Participation in Auctions|
with James W. Roberts, Andrew Sweeting: w19352
Regulating bidder participation in auctions can potentially increase efficiency compared to standard auction formats with free entry. We show that the relative performance of two such mechanisms, a standard first-price auction with free entry and an entry rights auction, depends non-monotonically on the precision of information that bidders have about their costs prior to deciding whether to participate in a mechanism. As an empirical application, we estimate parameters from first-price auctions with free entry for bridge-building contracts in Oklahoma and Texas and predict that an entry rights auction increases efficiency and reduces procurement costs significantly.
Published: Vivek Bhattacharya & James W. Roberts & Andrew Sweeting, 2014. "Regulating bidder participation in auctions," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 675-704, December. citation courtesy of