SSRN Top Papers of 2015

1. How Fox News Changed American Media and Political Dynamics by Bruce Bartlett (Independent)

I have been concerned about the drift of American politics for some time, especially the extreme rightward shift of the Republican Party. I believe that Fox News has a lot to do with this, allowing many Republicans to live in a bubble or echo chamber where they hear only views they agree with, never have those views seriously challenged, and where facts are massaged to be palatable to their worldview or simply excluded. I believe the rise of Donald Trump, which was abetted by his many appearances on Fox as a political & policy analyst, owes much to the Fox phenomenon. While I know that there are many liberals who share this view, they tend to cherry-pick their evidence. I tried my best to prove my point with references to survey data and studies by reputable academics in peer-reviewed journals. That’s what makes this study different and perhaps explains its popularity. I am continuing to study this phenomenon.                                                                                      -Bruce Bartlett

2. A Brief Introduction to the Basics of Game Theory
by Matthew O. Jackson (Stanford University)

3. A Quantitative Approach to Tactical Asset Allocation by Mebane T. Faber (Cambria Investment Management)

4. ‘A Diamond is Forever’ and Other Fairy Tales: The Relationship between Wedding Expenses and Marriage Duration by Andrew M. Francis (Emory University – Department of Economics) and Adam Sanjurjo (Universidad de Alicante – Departamento de Fundamentos del Análisis Económico)

5. A Five-Factor Asset Pricing Model by Eugene F. Fama (University of Chicago – Finance) and Kenneth R. French (Dartmouth College – Tuck School of Business)

6. Understanding the Modern Monetary System by Cullen O. Roche (Orcam Financial Group, LLC)

Thanks to SSRN for hosting such wonderful content. I’m humbled to be among such prestigious company.
This paper has attempted to establish an operational approach to understanding modern money and the monetary system. I hope it has provided readers and researchers with a better understanding of facets about this highly complex and dynamic system.  If nothing else, I hope it has opened some minds and helped to spark an intelligent dialogue about the importance of understanding money in the modern economy.
-Cullen O. Roche


7. Letter to a Young Social Justice Warrior Who Requested a Formal Apology by Seth Barrett Tillman (National University of Ireland, Maynooth (NUI Maynooth) – Faculty of Law)

8. China’s Ideological Spectrum by Jennifer Pan (Stanford Department of Communication) and Yiqing Xu (Massachusetts Institute of Technology (MIT) – Department of Political Science)

Jen and I are really happy to see the interest in our paper. It was a big surprise to us, but we hope that this is the beginning of more work on ideology/political attitudes of ordinary people in China and in other authoritarian regimes. Here is NYT article that describes the preliminary results presented by an early version of this paper.
-Yiqing Xu 

9. Size Matters, If You Control Your Junk by Clifford Asness (AQR Capital Management, LLC), Andrea Frazzini (AQR Capital Management, LLC), Ronen Israel (AQR Capital Management, LLC), Tobias J. Moskowitz (University of Chicago – Booth School of Business) and Lasse Heje Pedersen (New York University (NYU) – Department of Finance)

This paper would not have been possible without the research of many over the last decade on the returns to various ‘quality’ factors and over the last several decades on scrutinizing the size effect.  Our paper establishes that the evidence for the size effect is quite small, but controlling for quality it is resurrected to quite a large and robust anomaly.  This is not the same as saying one should heavily tilt to quality in small (things like value, momentum, and other known factors still work) it’s about the marginal returns to small itself.  Our findings are quite important to theory and understanding the cross-sectional variation in returns – they restore a very strong size effect that places it on equal footing with other anomalies such as value and momentum.  In other words, we’re back to having to explain a significant marginal size effect.  We hope future academic research will explore further the economic relation between size and quality and what drives their positive risk premia.  From a practical perspective, we hope to clarify how much practical significance to portfolio formation our results entail and whether practical implementation is significantly affected by our findings.  We’ll see!
-Tobias J. Moskowitz


10. Surprised by the Gambler’s and Hot Hand Fallacies? A Truth in the Law of Small Numbers by Joshua Benjamin Miller (Bocconi University) and Adam Sanjurjo (Universidad de Alicante)

The catalyst for this paper was a shocking challenge to our intuitions as researchers. We had just finished coding 29 years of NBA three point shootout data, for the paper we would soon write: “Is the Belief in the Hot Hand a Fallacy in the NBA Three Point Shootout?” We were chatting on the phone, and while we would soon run this new dataset through the (unbiased) statistical analysis that we had previously performed on controlled shooting datasets in “A Cold Shower for the Hot Hand Fallacy,” this takes time, and we were impatient. As a result, we decided to quickly look at a particular shooter’s hit rate on those shots taken when on a streak of three or more hits, which is the same measure employed in the seminal study of Gilovich, Vallone, and Tversky (1985). The player was Craig Hodges, a long time teammate of Michael Jordan. The reason we picked Hodges was because he had the most shots of any competitor, and we both felt after watching his sessions that he had a noticeable tendency to “get hot.” Shockingly, when we checked his hit rate when on streaks, we found no evidence of a hot hand. This was a puzzling moment for us—either we were suffering from a serious cognitive illustion, or there was a problem with the statistic. Within 10 minutes, running simulations over the phone, we had discovered the surprising, and substantial, bias in this very intuitive statistic for measuring streak shooting. From there, the bias’s surprising implications for the gambler’s fallacy in sequences of completely random data was immediate.
For us, the bias was an important discovery, because while our previous papers (mentioned above) find substantial evidence of hot hand shooting, we have found that people, in general, have been relatively more moved by the bias, and the fact that it renders the original hot hand fallacy result invalid. Having SSRN as a platform has been great for us, as our paper has been seen there by folks from across many disciplines, who have then gone on to contact us directly and/or participate in many lively discussions on related newspaper and blogs comments sections. This interesting public discussion, in turn, allowed us an exciting opportunity to “crowdsource” multidisciplinary (and lay) input, and use it to inspire a new paper that we are excited about, and which we have just posted on SSRN, entitled “A Bridge Between Monty Hall and the (Anti-) Hot Hand: Restricted Choice, Selection Bias, and Empirical Practice.” So in short, we owe special thanks to both Craig Hodges, and SSRN!
-Joshua Miller and Adam Sanjurjo