Chicago Booth Talks Suspect Stock Trading, and More – Chicago News
Let’s explore some of the most interesting stories that have emerged from Chicago business schools this week.
Why Do Investors Seek out Stock Swindles? – Chicago Booth Blog
The University of Chicago Booth School of Business (the new number one business school in the country according to U.S. News) recently published new research that uncovers an unfortunate gambling problem among some German investors who “buy suspect stocks for the thrill of it, even when they know better.”
Booth Professor Christian Leuz collaborated with Leibniz University of Hanover’s Steffen Meyer, Humboldt University of Berlin’s Maximilian Muhn, Harvard’s Eugene Soltes, and Goethe University of Frankfurt’s Andreas Hackehtal on a new working paper entitled, “Who Falls Prey to the Wolf of Wall Street? Investor Participation in Market Manipulation,” which examines “the German stock market, asking who invests in these schemes and how often.”
“Of these investors, 6,569 individuals—nearly 6 percent of the sample—took part in pump-and-dump schemes, investing an average 11.4 percent of their portfolio’s overall value and sustaining an average loss of nearly 30 percent.”
Read more about the quintet’s stock trading research here.
2018 MBA Chile Immersion – Mendoza College of Business Blog
Students from the University of Notre Dame Mendoza College of Business recently embarked on a five-day study abroad trip to Santiago, Chile, where they “toured some of the most innovative and philanthropic local businesses.” In early March, the group paid a visit to fruit producer Vista Hermosa, based in the Central Zone of Chile (Melipilla). Vista Hermosa’s mission is to “produce good quality fruit and have control of it from its harvest until it is shipped to different markets.” The company gives “special emphasis to the care of the environment, protecting the native flora and fauna, as well as the efficient use of fertilizers and agrochemicals.” According to one student testimonial:
“Our visit consisted of a tour of both the farm and the packing plant to better understand the production and fruit export process. There is a small church on the farm grounds available for the employees who live on the farm. We were treated to fresh pears and cherries, the latter of which is one of the farms biggest exports.”
You can read more about the Mendoza’s Chilean itinerary here and watch the student’s day one diary of the trip below.
Trying to Be Persuasive? Here’s What You Are Likely Doing – Kellogg Insight
Northwestern University Kellogg School of Management professor of marketing Derek Rucker and associate professor of management and organizations Loran Nordgren recently published new research that attempts to offer a glimpse into how “people use language in persuasion.” The duo found that “participants’ language tends to become more emotional when they are motivated to persuade others to buy a product.” Rucker elaborates:
“The gravity of emotional language is hard to escape, even when you know the audience wants to hear a more cognitive appeal. We observe that people express more emotion even in categories where that might be odd and potentially less effective. When it comes to influence, emotion is arguably the earliest form of communication we have.”
Check out more of the duo’s research here.
Columbia Business Prof Co-Authors Study of How Pop Songs Become Hits
Building a quality song doesn’t exactly mean it will become a hit single, but there are ways to predict how it’s possible. Columbia Business School looked further into the hit-making algorithm songwriters can take note of, but it is hardly a guarantee it will work.
In a new American Sociological Review paper entitled “What Makes Popular Culture Popular? Product Features and Optimal Differentiation in Music,” co-authors Michael Mauskapf, a CBS Assistant Professor of Management, and Noah Askin, an INSEAD Assistant Professor of Organizational Behavior, found that all top-charting anthems share one attribute: they balance familiarity and novelty. In other words: songs have to be bold, but not too bold and predictable, but not too predictable, lest they totally alienate or bore listeners to tears.
The duo used music intelligence platform The Echo Nest to analyze the key, mode, and tempo of over 26,000 songs. According to Askin, “The songs that reach the highest echelons of the charts bear some similarity to other popular songs that are out at the same time, but they must be unique in certain ways in order to differentiate themselves.” Mauskapf adds, “We found that songs with a somewhat below average typicality score tended do better on the Hot 100.”
They also accounted for non-musical factors, such as previous chart success, the cachet of an artist’s team, a particular artist’s “star factor,” and marketing budget. While these elements are certainly important, the researchers seem to agree that “hit song science” is ineffectual at best.
Mauskapf explains, “It’s very difficult to predict what kinds of songs other musicians will release, and when audiences will find them to be “optimally distinct.” Askin adds, “What becomes popular next is likely to be slightly differentiated from the last round of hits, leading to a constant evolution of what is popular. Popularity is a moving target, but the context always remains relevant. This is at least as much art as it is science.”
The Answer To Trump’s Victory Is Behavior, According To Harvard
In the early days after the 2016 presidential election, one of the first reflections many are looking into is how polling data was so off the mark.
