Title:
Cheap Talk and Strategic Rounding in LIBOR Submissions  (with Angel Hernando-Veciana)

Abstract
This paper constructs a model of directed search in the interbanking market and tests its empirical implications with data from the LIBOR benchmark setting process. Interbanking rates were until recently based on judgmental estimates of borrowing costs published by a panel of banks. We interpret this as a cheap talk game that allowed banks to communicate nonveriable information about their borrowing costs to potential counterparties. Under normal market conditions there is a welfare maximizing equilibrium where banks truthfully disclose their borrowing cost even if misstating costs is not penalized, but, in times of financial stress, only equilibria survive, in which submissions are partially revealing of the bank’s true borrowing rate. We take this prediction to the data and show that, indeed, the precision of the panel banks’ individual estimates is chosen strategically. Banks round more frequently if the perceived riskiness of the bank increases. Rounding is also more frequent for the more liquid short term rates and for certain benchmark maturities. We discuss the implications of our results for the design of benchmark setting mechanisms and the ongoing LIBOR lawsuits

Leading retail, an international immersion

a Walmart Program at INCAE

CULTURAL BRANDING STRATEGIES

Schedule:

June 20 – July 1
June 20 – June 30 (6:00pm – 9:00pm)
June 24 and July 1 (9:00am – 12:00m)

The course main objective is to develop an understanding of the specificities of the cultural approach to brands. The course analyzes how a cultural strategy may help to market values, narratives and codes in order to create economic value. It also questions traditional approaches to marketing and branding by showing that brands create culture rather than merely adapting themselves to existing cultural schemes. The seminar is based on a semiotic and anthropological perspective to understand how brands are built and to analyze how brands can use, produce and market cultural iconicity.

Benoît Heilbrunn is Full Professor of marketing and branding at ESCP Europe and the scientific director of the «Marketing and Communication» specialized master. He holds a PhD in Marketing from the Paris – Dauphine University and INSEAD (2003), and has studied philosophy, semiotics and marketing. Moreover, he is Assistant Professor at the IFM (French Institute of Fashion). He has published more than 10 books and 50 articles on consumption, branding and design management. During his professional career, he has participated as marketing and branding consultant for various companies.