Runjing Lu

Ph.D. Candidate - Department of Economics

Research Summary

I specialize at the intersection of finance and labor economics. My work employs modern empirical methods and naturally occurring data to understand: (1) the economic and behavioral factors influencing investor behavior and worker productivity, and (2) how stock market fluctuations affect various aspects of investors' lives. I am also interested in exploring unintended consequences of government policies.

Research Statement  (PDF)

Job Market Paper

"In the Spotlight: Impact of Analyst Awards on Financial Markets"  (PDF) (w/ Siyu Chen)


[SWFA Best Doctoral Paper in Financial Markets. Presented at SWFA, FMA PhD Session, FMA Doctoral Consortium, Academy of Behavioral Finace & Economics, AAA Northeast Region meeting, AFA poster]

The media is shown to facilitate information incorporation into asset prices when it promotes new information. But the causal evidence on how asset prices are affected when the media draws investor attention to stale information is still scarce. We exploit a natural experiment in which financial analysts who barely win an award from a high-profile financial magazine are featured on the front page while those just missing it are not. We find that the award announcement causes higher market reaction to pre-existing recommendations from barely winners relative to those from barely non-winners. The difference in reaction amounts to 1.3 times the average return to non-stale recommendations but fully reverses in six weeks. Evidence supports that the overreaction is driven by attention trading due to media exposure of award winners rather than by quality signaling from winning the award. Informed investors' speculative trading to take advantage of the overreaction further amplifies the price volatility. To understand the longer-term consequences of the award, we explore how brokerages and analysts respond in the year following. We find that brokerages assign more resources to awardees. The awardees issue more accurate and less biased earnings forecasts but only for stocks unaffiliated with the brokerages. Our results highlight the price destabilizing effect of the media when it draws attention to stale information and imply a potential bias in analysts' research induced by conflicts of interests.

Working Papers


"Symbolic Awards at Work: A Regression Discontinuity Design"  (PDF) (w/ Teng Li, under review)

[Presented at SOLE, COPE, EMCON, Warwick PhD conference, ACLEC poster]

This paper studies the effects of a non-pecuniary symbolic award on winners, losers, and their peers, using a regression discontinuity design. We identify newly recruited insurance sales agents who barely won a quarterly "Best Rookie" award and their counterparts who barely missed it in a large insurance company. Our main finding is that barely winners earn less insurance commission than barely losers in the quarter after the award. Surprisingly, the performance difference is driven by winners earning less rather than losers earnings more. We test and rule out mechanisms like mean reversion, signaling, gaming, learning, effort reallocation, and strategic reallocation across time or across teammates, but we find empirical support for negative peer pressure triggered by the award designation. We also examine the spillover effects of the award designation on the coworkers of barely winners and barely losers. We find no evidence for significant spillovers.


"When Weed is Legalized Next Door: How Colorado's Recreational Marijuana Legalization Affects Neighboring States"  (PDF) [Appendix]  

I study how Colorado Recreational Marijuana Legalization (RML) affects illegal marijuana possession in the neighboring states. I use a difference-in-differences (DID) design with distance to Colorado border as treatment intensity. I find that Colorado RML increases marijuana possession offenses among adult males in police stations closer to the Colorado border relative to those farther away. The number of offenses and the amount of marijuana seized increase in locations near highways and roads. These findings add to the heated policy debate over the pros and cons of RMLs by pointing out the unintended burden on the neighboring states of RML states.

Research in Progress

"Stock Market's Toll on Newborns' Health"

"Stock Market Fluctuations and Worker Productivity"