Publications

We report experimental results for a simple bimatrix game between a manager and an auditor. We investigate whether the quality of audited financial statements improves if the relative proportion of perfectly honest auditors increases. We find that the quality of audited reports is higher if computerized auditors who always perform a high audit effort are present. This result is in direct contrast to the Nash prediction for our game. The Quantal Response Equilibrium, which explicitly takes into account boundedly rational behavior, supports our experimental data. Our main findings depend neither on framing nor the payoff matrix we use.

The current study investigates a tripartite incentive contract between an innovator supplying an intellectual asset, a professional assigned to productive tasks, and a consulting firm specializing in matching ideas and professional skills. A rather simple pure tripartite partnership implements the consultant's expected profit maximum and maximizes the project's expected surplus. The liquidity-constrained professional is compensated by receiving a share of one half in the new venture. The consultant's and the innovator's shares reflect the relative value of search. However, the consultant's optimal search effort to find an appropriate production partner is inefficiently low.

This article is a study of bicameral conflict resolution between the Council and the European Parliament in the European Union, which has established a bicameral conciliation process under the co-decision procedure. Scholars commonly agree that the European Parliament has gained power under the co-decision procedure, but the impact of the conciliation process on the power distribution between the Council and the European Parliament remains unclear. The scholarly debate suggests that the power of the institutional actors depends on their proximity to the status quo, the (im-)patience and the specific preference distribution of the institutional actors, although most analyses assume that the Commission plays an insignificant role. Using an ordered probit model, this study examines the power distribution between the two institutional actors, the factors for their bargaining success and the role of the Commission in the period between 1999 and 2002. The findings show that the European Parliament wins most conflicts, but that the Council is more successful in multi-dimensional disputes. The results confirm some theoretical claims made in the literature, such as the importance of the status quo location and of preference cohesiveness. However, they also reject a major assumption in the literature on the irrelevance of the Commission in the conciliation process, which we show to have an influential informational position for parliamentary success.

There is an increasing shortage of human organ transplants in Germany. This paper aims at understanding the reasons for that shortage and discusses various ways to alleviate it by changing the rules of donation and procurement. In particular we consider creating adequate incentives for hospitals and individual donors to participate in the process. In Section 2 we provide a stylized account of the nature and extent of organ shortage in Germany in terms of some key data. Then, in Section 3 we will turn to the incentives of hospitals and their employees, in particular those of intensive care units. When they intend to participate in the process of procuring cadaveric human organ transplants, they may face some rather severe obstacles. In Section 4 we turn to the role of potential organ donors and their families. We discuss different strategies to increase consent to a donation of organs after brain-death has been diagnosed. We particularly consider monetary and other incentives as well as the introduction of the presumedconsent rule. In Section 5 we conclude that organ shortage is due not to natural constraints but to inappropriate social institutions. Introducing a presumed consent rule, reciprocity in organ allocation, better payments for hospitals and for donors are proposed as potential remedies.

All known human societies establish social order by punishing violators of social norms. However, little is known about how the brain processes the punishment threat associated with norm violations. We use fMRI to study the neural circuitry behind social norm compliance by comparing a treatment in which norm violations can be punished with a control treatment in which punishment is impossible. Individuals' increase in norm compliance when punishment is possible exhibits a strong positive correlation with activations in the lateral orbitofrontal cortex and right dorsolateral prefrontal cortex. Moreover, lateral orbitofrontal cortex activity is strongly correlated with Machiavellian personality characteristics. These findings indicate a neural network involved in social norm compliance that might constitute an important basis for human sociality. Different activations of this network reveal individual differences in the behavioral response to the punishment threat and might thus provide a deeper understanding of the neurobiological sources of pathologies such as antisocial personality disorder.

Social norms and the associated altruistic behaviours are decisive for the evolution of human cooperation and the maintenance of social order, and they affect family life, politics and economic interactions. However, as altruistic norm compliance and norm enforcement often emerge in the context of inter-group conflicts, they are likely to be shaped by parochialism--a preference for favouring the members of one's ethnic, racial or language group. We have conducted punishment experiments, which allow 'impartial' observers to punish norm violators, with indigenous groups in Papua New Guinea. Here we show that these experiments confirm the prediction of parochialism. We found that punishers protect ingroup victims--who suffer from a norm violation--much more than they do outgroup victims, regardless of the norm violator's group affiliation. Norm violators also expect that punishers will be lenient if the latter belong to their social group. As a consequence, norm violations occur more often if the punisher and the norm violator belong to the same group. Our results are puzzling for evolutionary multi-level selection theories based on selective group extinction as well as for theories of individual selection; they also indicate the need to explicitly examine the interactions between individuals stemming from different groups in evolutionary models.