Author: Karthick Arunachalam

Roy Long, University of Chicago -- The game theoretic concepts of rationalizability and iterated dominance are closely related and provide characterizations of each other. Indeed, the equivalence between them implies that in a two player finite game, the remaining set of actions available to players after iterated elimination of strictly dominated strategies coincides with rationalizable actions. I prove a dimensionality result following from these ideas. I show that for two player games, the number of actions available to the opposing player provides a (tight) upper bound on how a player’s pure strategies may be strictly dominated by mixed strategies.

Yongzhe Wang, University of North Carolina, Chapel Hill -- This study reveals that commercial banking backgrounds of corporate executives negatively impact corporate innovation by reducing patent applications, researcher employment, and R&D expenses. The effects intensify as the number of executives possessing such backgrounds increases. A novel machine learning framework, ML-DID, is outlined to mitigate endogeneity concerns, including omitted variable bias and selection bias in the setting of “Panel Data with Multiple Treatment Timing.” Its robustness is tested against various specifications using the random forest algorithm. Additional analysis demonstrates that the impact of a banking background is strongest among firms with financial constraints and in less competitive industries.