Research

In new research, Blake Jackson and Ilya Strebulaev track the careers of 100,000 people working at venture capital firms in the United States to ask which investors succeed and why. They find that five percent of VCs generate 90 percent of the industry's profits, that the backgrounds investors bring with them predict who ends up in that group, and that public recognition itself opens the doors to the deals that keep them at the top.

In new research, Pranjal Drall and Andrew Granato argue that the move of private equity firms into life insurance has increased the probability that insurers will go insolvent. If they do, under an obscure system of insurance guaranty funds, the losses will spread out beyond the insolvent insurer’s creditors to other insurers and, ultimately, taxpayers. 

In new research, Andrey Simonov, Daniil Mikhailov, Ruben Enikolopov, and Ruben Durante estimate that when a 2016 law pushed Russia’s leading news aggregator Yandex to reduce its references to independent outlets, readers kept following its recommended news stories as before, reducing traffic to the excluded outlets. In response, excluded outlets changed the news they produced.

In new research, Yulia Chikish, Gregory J. Colman, Dhaval M. Dave, Brad R. Humphreys, Zachary Santamaria, and Zachary Winship find that New York City congestion pricing has reduced emergency medical services response times.

The discussion about concentration in artificial intelligence markets focuses on the least concentrated layer, the models. The chokepoint that actually threatens AI is the production of refined minerals that go into chips, data centers, and electricity production, writes Piyush Akimitsu.   

In recent research, Jorge Alé-Chilet, Cuicui Chen, Jing Li, and Mathias Reynaert find that when faced with environmental regulations, collusion among German car manufacturers reduced their expected non-compliance fines and significantly increased consumer and producer surplus. At the same time, social welfare decreased by billions of euros because of increased pollution.

Wealth taxes can make capital markets more efficient when they are optimally combined with lower capital gains taxes, argue Sergio Ocampo, Guttorm Schjelderup, and Floris Zoutman in new research.

Anticompetitive behavior, such as consolidation, in the health-insurance industry has allowed a small group of insurers to dominate the market. One of the main drivers of this behavior is “adverse selection,” where individuals know more about how sick they are than insurance companies do. To mitigate the risk of paying out more claims than they can cover, insurers often raise their premiums. Kellogg’s Amanda Starc and her colleague argue that, to create a truly healthy health-insurance marketplace, regulators and policymakers need a framework for rethinking the complex interactions between adverse selection and regulatory guardrails.

News media circulates with warnings about speculative bubbles in artificial intelligence and cryptocurrency, but history shows that not all bubbles are bad for the economy, and some may even aid long-term growth. In new research, Jared Bernstein, Aneil Kovvali and Jeffery Y. Zhang distinguish between constructive and destructive bubbles and suggest how the government and financial institutions can limit the consequences of the latter.

In new research, Francisco E. Beneke Avila proposes a multifactor test to distinguish between the legitimate exercise of the right to lobbying and efforts to capture areas of public policy. He argues that the latter is an abuse of the firm’s political rights that can justify the intervention of EU competition authorities when corporate political activity leads to a lessening of competition.