Publications

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As the positive impact of trust on business success is widely undisputed, the question of how to measure trust naturally arises. Both expectations of trustworthy behavior and possible gains and losses from a trusting relationship influence the level of trust between two parties or individuals. This paper explores whether an exchange featuring (almost) equal expected gains and expected losses for a trusting individual is evidence for high trust or low trusts; we argue that such an exchange tends to display low trust. A simple trust measure is suggested that can be applied both in experimental and analytical research.

There is well established empirical evidence that more redistribution occurs when luck rather than performance determines the earnings. We provide experimental evidence on how unequal access to performance enhancing education affects demand for redistribution. In this experiment, we can control the information about the role of luck and effort. We find that unequal opportunities evoke a preference for redistribution that is comparable to the situation when luck alone determines the allocation rather than performance. Furthermore, unequal opportunities reduce performance incentives.

By examining voting behavior in a referendum on the construction of a concert hall in Germany, I show that political ideology influences cultural policy. The results suggest that resistance to the concert hall was particularly strong in electoral districts in which majorities of citizens vote for the social democrats. By contrast, constituents of rightwing parties voted more in favor of the project. This voting pattern indicates that cultural policy is ideology-induced. The direct-democratic vote against the concert hall is not in line with the voting behavior of the representatives in the city council. My findings thus show that the voting behavior of political representatives may be decoupled from the preferences of their constituents even in closely knit jurisdictions in which the principal-agent relationship between voters and representatives is usually thought to favor the principals. Moreover, this decoupling has been documented for a policy issue that does not require substantial information or specialized knowledge to be evaluated but rather voters' decisions are based on ideological convictions.

Research evaluations based on quality weighted publication output are often criticized on account of the employed journal quality weights. This study shows that evaluations of entire research organizations are very robust with respect to the choice of readily available weighting schemes. We document this robustness by applying rather different weighting schemes to otherwise identical rankings. Our unit of analysis consists of German, Austrian and Swiss university departments in business administration and economics.

Confessions after failures are socially desirable. However, confessions also bear the risk of punishment. In a laboratory experiment I examine how confessions work. I analyze whether the willingness to punish harmful failures depends on how the harmed party has learned about the outcome. The harmed party can learn about the outcome via random detection or self-report by the performer. I find that confessions are a powerful instrument: punishment for confessed failures is less likely than for randomly detected failures.

This paper incorporates a classical moral hazard problem with unobserved worker effort and bonus payments into a competitive search equilibrium environment with risk averse workers. The resulting framework permits an analysis of the effects of labour market competition and search frictions on individual contract setting. The paper demonstrates that the classical model of moral hazard with an ex-post wage setting regime may underestimate the optimal values of wages and bonus payments in competitive labour markets. The baseline model is extended to account for employer heterogeneity with respect to capital endowments. In the extended model, wage competition between employers serves as a source of positive correlation between wages and bonus payments reported in a number of empirical studies.

To analyze the optimal social insurance package, we set up a two-period life-cycle model with risky human capital investment, where the government has access to labor taxation, education subsidies and capital taxation. Social insurance is provided by redistributive labor taxation. Moreover, both education subsidies and capital taxation are used as catalyzers to facilitate social insurance by mitigating distortions from labor taxation. We derive a Ramsey-rule for the optimal combination of these two instruments. Relative to capital taxation, optimal education subsidies increase in their relative effectiveness to boost labor supply and in households' underinvestment into education, but they decrease in their relative net distortions. For their absolute levels, indirect complementarity effects, i.e., influencing the effectiveness of the other instrument, do matter. Generally, a decrease in capital taxes should go along with an increase in education subsidies.

Education policy-makers and practitioners want to know which policies and practices can best achieve their goals. But research that can inform evidencebased policy often requires complex methods to distinguish causation from accidental association. Avoiding econometric jargon and technical detail, this paper explains the main idea and intuition of leading empirical strategies devised to identify causal impacts and illustrates their use with real-world examples. It covers six evaluation methods: controlled experiments, lotteries of oversubscribed programs, instrumental variables, regression discontinuities, differences-indifferences, and panel-data techniques. Illustrating applications include evaluations of early-childhood interventions, voucher lotteries, funding programs for disadvantaged, and compulsory-school and tracking reforms.