Using textual analysis of stock message board posts, we find that investors’ sentiment expressed through messages can predict future one-day stock returns. For small stocks, message board sentiment can predict up to two-day cumulative future returns. This increased predictive power on small...

It has been widely documented that investment decisions of individual investors exhibit local bias. Yet little is known of how societal forces affect investors' portfolio allocations of local versus nonlocal assets. We propose that social capital, and trust in particular, decreases the local...

In this paper, we consider the problem of allocating an indivisible good between two agents under incomplete information. We provide a characterization of mechanisms that maximize the sum of the expected utilities of the agents among all deterministic feasible strategy-proof mechanisms: Any...

This paper analyzes the problem of matching two heterogeneous populations, e.g., men and women. If the payoff from a match exhibits complementarities, it is well known that absent any friction positive assortative matching is optimal (PAM). Coarse matching refers to a situation in which the...