How Rich are the Parents of Your Money Manager, and What Does it Tell You About his Alpha?

In the last few decades, numerous studies in financial literature have been devoted to the question of “alpha”—that is, the ability of money managers to beat market returns. The main finding is that most asset managers fail to beat the market, and high active management fees are the main culprit. Yet, many investors still choose to give their money to active money managers in the hope that they will beat the market. Researchers at the University of Michigan and the University of New South Wales used a novel dataset to come up with another possible criterion for managers who have […]

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Why is Medical Marijuana Still Not Accepted in All 50 States? Ask George Stigler

A new working paper by University of Georgia researchers shows that medical marijuana leads to sharp drops in the number of prescriptions for branded drugs.The paper estimates savings of up to $1.5 billion per year in Medicaid spending if medical marijuana was legalized in all 50 states. The ideas of the late University of Chicago economist George Stigler might offer a potential explanation of why this has not happened yet.  

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Are “Pay for Delay” Settlements in Patent Litigation Collusive?

A new study suggests that “pay for delay” settlements–in which generic drug manufacturers that challenge the patents of branded drug firms agree to drop their challenge in exchange for sharing monopoly profits—decrease generic entry, inflate prices, and depress the quantity of competitors in the market. It also finds that eliminating “pay for delay” settlements entirely would result in a relatively small reduction in R&D.  

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