Robert G. Hammond

Profit Leak? Pre-Release File Sharing and the Music Industry

Using data from an exclusive file-sharing Web site that allows users to share music files using the BitTorrent protocol, I exploit exogenous variation in the availability of sound recordings in file-sharing networks to isolate the causal effect of file sharing of an album on its sales. Using within-album variation in illegal downloads and sales, I find that the effect is essentially zero: The elasticity of sales with respect to illegal downloads is one-tenth of one percentage point. However, the finding that file sharing is not harmful to individual artists is not inconsistent with the well-documented fact that file sharing is harmful to the music industry (the fallacy of composition). More important, I find that file sharing benefits more established and popular artists who are signed to major labels, which is consistent with recent industry trends.

Sudden Unintended Used‐Price Deceleration? The 2009–2010 Toyota Recalls

Using data from the vehicle resale market, I test consumer responsiveness to large‐scale product recalls that are caused by safety problems. The used‐vehicle prices of Toyotas are compared to the used‐vehicle prices of the other major domestic and foreign manufacturers. The results quantify the losses suffered by Toyota vehicle owners in secondary markets due to the 2009–2010 safety recalls of more than 9 million Toyota Motors vehicles. The treatment effect of a recall is measured using panel data with a difference‐in‐differences estimation approach that allows for time‐varying treatment effects and serial correlation. I find that this recall episode had negative effects in the resale market for automobiles that were quantitatively small (less than 2% of the vehicle’s resale value), statistically indistinguishable from zero, and short lived (did not persist beyond December 2009). A comparison with Audi’s recalls in the 1980s of vehicles with sudden unintended acceleration suggests that the extent to which a company’s reputation is established is more important than whether or not a company has a reputation for producing high‐quality products.

Quantifying Consumer Perception of a Financially Distressed Company

To measure how consumers respond to negative information about the financial health of a durable-goods producer, I use the prices at which vehicles sell in secondary markets to quantify consumer perception of the Chrysler Corporation during the period surrounding the Chrysler Loan Guarantee Act of 1979. I focus on Chrysler’s July 31, 1979 announcement of financial distress and request for assistance from the U.S. government. The trend in the prices of used Chrysler vehicles relative to those of its American competitors provides strong support for the claim that consumers reduce their willingness to pay for the goods of a financially distressed company.

What Drives Pricing Behavior in Peer-to-Peer Markets? Evidence from the Carsharing Platform BlaBlaCar

How are prices and market outcomes determined on peer-to-peer platforms? More importantly, how should we expect price-setting and demand behavior to change as these markets mature? We provide the first empirical analysis of the world’s leading carsharing platform, BlaBlaCar. Our econometric model explicitly accounts for the joint determination of price and quantity demanded and finds that pricing decisions evolve as drivers gain experience with the platform. More-experienced drivers set lower prices and, controlling for price, sell more seats. Our interpretation is that more-experienced drivers on BlaBlaCar learn to lower their prices as they gain experience. Further, we find that driver demographics matter. The demographic characteristic with the quantitatively largest effect is for drivers with an Arabic-sounding name, for whom there is meaningfully lower demand, despite the fact that these drivers set lower prices. In total, our results suggest that peer-to-peer markets such as BlaBlaCar share some characteristics with other types of peer-to-peer markets such as eBay but remain a unique and rich setting in which there are many new insights to be gained.

Annuity Options in Public Pension Plans: The Curious Case of Social Security Leveling

Social Security Leveling is an annuity option that allows defined benefit pension participants to receive a level income throughout retirement by taking a larger pension benefit before they reach Social Security eligibility. This option can enable retirees to access a greater proportion of their employer pension wealth at younger ages and have a smoother income stream in retirement, at the cost of a lower pension payment during later retirement years. To evaluate the desirability of this option, a retiree must consider pricing, anticipated life expectancy, and income needs throughout retirement. We show that plan design features of this annuity option favor those who expect a shorter-than-average period of retirement and who have higher personal discount rates. This study uses detailed administrative records on all North Carolina state and local government retirees from 2009 through 2014. Among individuals claiming retirement benefits before age 62, over 20% chose the Social Security Leveling annuity option. Using multivariate regression analysis, this study finds evidence that North Carolina public sector retirees choose the Social Security Leveling option in a manner that is consistent with predictions.

INFORMING RETIREMENT SAVINGS DECISIONS: A FIELD EXPERIMENT ON SUPPLEMENTAL PLANS: INFORMING RETIREMENT SAVINGS DECISIONS

Although supplemental saving plans can be an important part of an individuals financial security in retirement, contribution rates remain low, particularly among those with lower salaries and less education. We report findings from an intervention that provided information on key aspects of the employer‐provided supplemental saving plans to older public employees in North Carolina. Among workers participating in a supplemental plan, individuals who received an informational flyer increased their contributions in the months following the intervention relative to the control group. In contrast, individuals who were not enrolled in a retirement saving plan were not moved to begin contributing to a supplemental plan. The results suggest that informational interventions can induce workers who are already engaged in the saving process to reassess their level of retirement preparedness. (JEL C93, D14, D9)