Research Interests

Innovation economics, house price dynamics, behavioral finance


Working Papers

Patent-Right Uncertainty and Mergers and Acquisitions (with Logan Emery

We use patent thickets to study how patent-right uncertainty impacts target selection in mergers and acquisitions. This uncertainty can create additional costs that disrupt technological synergies. We find that firms are less likely to be acquired when their patents are in thickets that exacerbate these costs. Conversely, firms are more likely to be acquired when their patents create thickets that mitigate these costs. These relations strengthen with the extent to which acquirers and potential targets overlap technologically, which reduces information asymmetry and increases the value of potential synergies. We also find that when a firm occupies the same thicket as the acquirer, acquisition probability depends on each firm's ability to impose costs on the other. Overall, we conclude that patent-right uncertainty is an important determinant of target selection in mergers and acquisitions. 

Extrapolation Bias and Short-Horizon Return Predictability (with Huseyin Gulen)

Using survey data, we show that investor expectations of short-horizon aggregate returns are extrapolative and negatively related to future short-horizon aggregate returns. To assess the role of extrapolative expectations in short-horizon return predictability at both the aggregate and firm levels, we develop a proxy for the extrapolative component of expectations. Our extrapolation proxy, which can be calculated for all firms and time periods, has significant short-horizon return predictive power at both the aggregate and firm levels. Overall, our results support extrapolation-based theories and suggest that short-horizon return predictability is better understood when considering the possibility of short-horizon return extrapolation.

House Price Dynamics and Mortgage Default Risk (with Jordan Martel)

We find that house price momentum, defined as positive autocorrelation in aggregate house price changes, is stronger and house price change volatility is weaker when and where mortgage default risk at origination is higher. These facts appear widely, both geographically and temporally, and are difficult to reconcile with existing theories of house price dynamics. To explain these facts, we introduce a model in which lenders use valuations that incorporate information relatively slowly. In equilibrium, prices reflect the valuations used by lenders most when default risk is highest. Our model jointly explains the observed relations between default risk, momentum, and volatility.