Latest Publications
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(2019): The Political Economy of Redistribution Policy CONGLETON, Roger D., ed., Bernard GROFMAN, ed., Stefan VOIGT, ed.. The Oxford Handbook of Public Choice, Volume 2. New York: Oxford University Press, 2019, pp. 520-541. ISBN 978-0-19-046977-1. Available under: doi: 10.1093/oxfordhb/9780190469771.013.24
The authors review the literature on the public-choice analysis of redistribution policies. They restrict the discussion to redistribution in democracies and focus on policies that are pursued with the sole objective of redistributing initial endowments. Since generic models of redistribution in democracies lack equilibria, one needs to introduce structure-inducing rules to arrive at a models whose behavior realistically portrays observed redistribution patterns. These rules may relate to the economic relationships, political institutions, or to firmly established preferences, beliefs, and attitudes of voters. The chapter surveys the respective lines of argument in turn and then present the related empirical evidence.
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(2019): Olley and Pakes‐style Production Function Estimators with Firm Fixed Effects Oxford Bulletin of Economics and Statistics. 2019, 81(1), pp. 79-97. ISSN 0305-9049. eISSN 1468-0084. Available under: doi: 10.1111/obes.12259
We show that control function estimators (CFEs) of the firm production function, such as Olley–Pakes, may be biased when productivity evolves with a firm‐specific intercept, in which case the correctly specified control function will contain a firm‐specific term, omitted in the standard CFEs. We develop an estimator that is free from this bias by introducing firm fixed effects in the control function. Applying our estimator to the data, we find that it outperforms the existing CFEs in terms of capturing persistent unobserved heterogeneity in firm productivity. Our estimator involves minimal modification to the standard CFE procedures and can be easily implemented using common statistical software.
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(2019): Genome-wide association analyses of risk tolerance and risky behaviors in over 1 million individuals identify hundreds of loci and shared genetic influences Nature Genetics. 2019, 51(2), pp. 245-257. ISSN 1061-4036. eISSN 1546-1718. Available under: doi: 10.1038/s41588-018-0309-3
Humans vary substantially in their willingness to take risks. In a combined sample of over 1 million individuals, we conducted genome-wide association studies (GWAS) of general risk tolerance, adventurousness, and risky behaviors in the driving, drinking, smoking, and sexual domains. Across all GWAS, we identified hundreds of associated loci, including 99 loci associated with general risk tolerance. We report evidence of substantial shared genetic influences across risk tolerance and the risky behaviors: 46 of the 99 general risk tolerance loci contain a lead SNP for at least one of our other GWAS, and general risk tolerance is genetically correlated ([Formula: see text] ~ 0.25 to 0.50) with a range of risky behaviors. Bioinformatics analyses imply that genes near SNPs associated with general risk tolerance are highly expressed in brain tissues and point to a role for glutamatergic and GABAergic neurotransmission. We found no evidence of enrichment for genes previously hypothesized to relate to risk tolerance.
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(2019): On the clock of the combinatorial clock auction Theoretical Economics. The Econometric Society. 2019, 14(4), pp. 1271-1307. ISSN 1933-6837. eISSN 1555-7561. Available under: doi: 10.3982/te3203
The combinatorial clock auction (CCA) has frequently been used in recent spectrum auctions. It combines a dynamic clock phase and a one‐off supplementary round. The winning allocation and the corresponding prices are determined by the Vickrey–Clarke–Groves rules. These rules should encourage truthful bidding, whereas the clock phase is intended to reveal information. We inquire into the role of the clock when bidders have lexicographic preferences for raising rivals' costs. We show that in an efficient equilibrium, the clock cannot fully reveal bidders' types. In the spirit of the ratchet effect, in the supplementary round competitors extract surplus from strong bidders whose type is revealed. We also show that if there is substantial room for information revelation, that is, if the uncertainty about the final allocation is large, all equilibria of the CCA are inefficient. Qualitative features of our equilibria are in line with evidence concerning bidding behavior in some recent CCAs.
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(2019): Effects of Acute Stress on Social Behavior in Women Psychoneuroendocrinology. 2019, 99, pp. 137-144. ISSN 0306-4530. eISSN 1873-3360. Available under: doi: 10.1016/j.psyneuen.2018.08.031
Acute stress is known to increase prosocial behavior in men via a “tend-and-befriend” pattern originally proposed as a specifically female stress response alongside the fight-or-flight response. However, the direct effects of acute stress on women’s social behavior have not been investigated. Applying the Trier Social Stress Test for groups (TSST-G), 94 women were confronted with either a stress or control condition. We repeatedly measured their subjective stress responses, salivary cortisol, and heart rate, and investigated their level of trust, trustworthiness, sharing, punishment and non-social risk using social decision paradigms. We detected significant increases in all stress parameters, as well as the wish for closeness during the stress condition. Acute stress exposure elevated prosocial trustworthiness and sharing without affecting non-social risk behavior. These results are in line with findings on the effects of stress in men, and further validate the tend-and-befriend pattern as one possible behavioral response during stress in humans.
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(2019): Banking-on-the-Average Rules CESifo Economic Studies. Oxford University Press (OUP). 2019, 65(2), pp. 131-153. ISSN 1610-241X. eISSN 1612-7501. Available under: doi: 10.1093/cesifo/ify023
In this article, we introduce a new way to determine requirements for bank capital: banking-on-the-average rules. Under these rules, a bank’s required level of equity capital is monotonically increasing in the realized equity capital of its peers. In a simple model, we illustrate the workings of banking-on-the-average rules. We show that in booms, these rules can prevent banks from taking excessive risks. Moreover, they alleviate the socially harmful procyclicality of conventional equity-capital rules, which may induce banks to cut back excessively on lending. Finally, we argue that under these rules, prudent banks can impose prudence on other banks. In addition, banking-on-the-average rules ensure the build-up of bank equity capital in booms and thus avoid excessive leverage.
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In this dissertation, I present three economic experiments in the area of accounting written during my doctoral studies at the University of Konstanz. I will present the three articles in the chronological order in which I started working on the respective projects. The first project is on the implications of audit market regulations on the behavior of market members and the market structure. In this project different approaches discussed by standard setters and even legal principles (e.g. joint audits and audit firm rotation) are compared. The second study investigates the effect of IFRS16 on the evaluation process of knowledgeable non-professional investors. Employing the eye-tracking technique, we are able to show the changes in information acquisition, weighting, interpretation and finally evaluation caused by IFRS16, which is legally binding by 1 January 2019. My third project explores the methodological issues related to process tracking (i.e. eye-tracking and mouse-tracking) research. In this study we measure the influence of the tracking method used on the information acquisition process.
The first paper is entitled “The Effects of Mandatory Audit Firm Rotation and Joint Audits on Audit Quality and Market Structure: Experimental Evidence”. Starting with the financial crisis and the green papers issued in 2010, a regulatory debate about the restructuring of the auditor market emerged. Both, audit firm rotation and joint audits have played a prominent role in this debate. Whereas audit firm rotation is mandatory in the European Union since 2016, the regulator in the Unites States decided against this requirement. Academics and regulators also have frequently proposed joint audits, which are currently mandatory only in France. We present the results of a market experiment that compares the effects of both mandatory audit firm rotation and joint audits against two extremes: an unregulated market and a setting in which the experimental software matches those auditors providing the highest quality with the most dishonest clients. We compare across these settings the clients’ decisions to report truthfully, the auditors’ decisions on audit effort and reporting, the resulting quality of audited client reports, and audit market concentration. We find that the quality of audited client reports is lowest in an unregulated market, higher under rotation, even higher with joint audits, and highest with a matching based on reputation. A higher probability that auditors will exert a sufficient effort level and a higher degree of auditor independence explain the difference in the quality of audited client reports between joint audits and rotation. We also find that joint audits and audit firm rotation result in a lower degree of market concentration than observed in an unregulated market. From the regulator’s perspective, joint audits seem more advantageous than mandatory audit firm rotation.
In the second paper “The new Leases Standard, Information Processing, and Evaluation: Experimental Evidence from an Eye-Tracking Study” we used eye-trackers to study the effects of a legal change in the presentation format of financial statements on the evaluation process of knowledgeable non-professional investors. The IASB issued the standard IFRS 16 (Leases), which is legally binding by 1 January 2019. The former distinction between the recognition of operating and finance lease becomes invalid and the lessee must capitalize all of its leases by recognizing the present value of the unavoidable future lease payments (IFRS 16.24) and presenting them in the balance sheet as leased asset (right-of-use assets). Research has shown that the location of information influences the evaluation of financial statement users. Prior studies empirically examined legal changes on the presentation format ex post, while we use an experiment with eye-tracking technology to investigate the effects of the changed presentation format under IFRS 16 on the evaluation process of the financial statement before this standard is legally binding. We find that the changed presentation format of IFRS 16 increases the acquisition rate of the lease liabilities and the leased asset and increases the weight readers put on these numbers. Additionally, key metrics like long-term debt, assets, and total debt are interpreted comparably higher when the respective information is recognized rather than disclosed. These changes in the acquisition, in the weighting, and in the interpretation lead to an overall worse evaluation of the financial situation of the company whose financial statement is assessed. Comparing eye-tracking data with decision data allows us to distinguish between the intuitive and deliberate processes of individuals when assessing financial statements. We thus extend prior research on individuals’ decision-making processes by comparing decision data with evidence from individuals’ eye movements.
The third paper “Data Collection in Information Search Processes” focuses on the methodological issues related to research on information search processes. Using mouse-tracking techniques like Mouselab, MouselabWeb, or Flashlight as an alternative to eye-tracking experiments has become popular in the past decades. Several studies on the question of whether the technique used has an effect on the decision observed have been published. In contrast, we investigate whether the technique used for recording information search processes influences the search process itself. We show that both – the occlusion of information and the necessity of using the mouse cursor to uncover information – influence the information search process of participants and significantly change key metrics used to describe this process. Conducting an experiment using the city size task, we are able to show that participants obliged to use a Mouselab alike framework with occluded informational cues changes an intuitive search behavior into a deliberate informational search process. Additionally, the direction of information search is influenced by the necessity of unveiling information via mouse cursor movement. While the outcome in our task is not influenced by the method used for process tracing, the metrics deduced from the recorded process data is highly depending on the method of choice. Moreover, the choice of information differs, when a Mouselab design is used. Thus, our findings challenge the assumption that mouse-tracking and eye-tracking are technologies to collect process data that are directly comparable. -
(2019): Incumbency Dominance in Letters to the Editor : Field Experimental Evidence Political Communication. Routledge, Taylor & Francis Group. 2019, 36(3), pp. 337-356. ISSN 0195-7473. eISSN 1091-7675. Available under: doi: 10.1080/10584609.2018.1540447
This article reports the results of a randomized field experiment conducted three weeks before the 2017 federal election in Germany. Four different versions of a letter to the editor were sent to all the German daily newspapers that handle letters to the editor independently. The versions differed in the subject matter of the letter, the chancellor Angela Merkel versus the main challenger Martin Schulz, and in the evaluation of this subject, positive versus negative. The experiment was designed to test for three different types of media bias: political bias, negativity bias, and incumbency dominance. We find no political bias in the decisions to print letters, and no statistically significant negativity bias. We do observe incumbency dominance: letters about the chancellor were 40% more likely to be printed.
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(2019): Labor Reallocation and Convergence : Evidence from East Germany Society for Economic Dynamics 2019 Meeting Papers. 2019, 139
In 1992, East Germans’ nominal wages were about half of West Germans’. By 1996, the gap reduced to a third, and today is about a quarter. We use matched employer-employee data for the universe of (male) Germans with social security records to study the determinants of this steep convergence. Our main result is that about half of the total convergence is driven by an improvement in the allocation of East German labor across firms. The bulk of this is driven by improvements in within-region reallocation in earlier years, while migration of East Germans toWestern firms steadily grows to explain more in recent years. Before 1991, both East German firms and workers were exposed to a distorted labor market under the planned economy of the German Democratic Republic. After reunification, both firms and workers were exposed to the same labor market policies as in West Germany, while workers were also allowed to freely move across the (former) border. The evidence suggests that the competitive labor market succeeded in quickly unraveling most of the misallocation generated by the planned economy. Consistent with this hypothesis, older birth-cohorts, who were exposed to distorted labor markets for a longer period, were the ones to gain the most immediately following reunification.
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(2019): Dual universities and dual study programs in German higher education : Will they replace apprenticeships in some occupational sectors? DEISSINGER, Thomas, ed., Ursel HAUSCHILDT, ed., Philipp GONON, ed. and others. Contemporary apprenticeship reforms and reconfigurations : conference proceedings. Wien: LIT, 2019, pp. 209-215. Bildung und Arbeitswelt. 35. ISBN 978-3-643-91114-8
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(2019): Attention-driven demand for bonus contracts European Economic Review. Elsevier. 2019, 115, pp. 1-24. ISSN 0014-2921. eISSN 1873-572X. Available under: doi: 10.1016/j.euroecorev.2019.02.007
In many markets supply contracts include a series of small, regular payments made by consumers and a single, large bonus that consumers receive at some point during the contractual period. But, if for instance its production costs exceed its value to consumers, such a bonus creates inefficiencies. We offer a novel explanation for the frequent occurrence of bonus contracts, which builds on a model of attentional focusing. Our main result identifies market conditions under which bonus contracts should be observed: while a monopolist pays a bonus to consumers—if at all—only for low-value goods, firms standing in competition always—i.e., independent of the consumers’ valuation—offer bonus contracts. Thus, competition does not eliminate but rather exacerbates inefficiencies arising from contracting with focused agents. Common contract schemes in markets for electricity, telephony, and bank accounts are consistent with our model, but cannot be reconciled with alternative approaches such as models on consumption smoothing, (quasi-)hyperbolic discounting, or switching costs.
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(2019): Zentrale Abiturprüfungen : Wirkungspotenziale aus theoretischer und empirischer Perspektive BERKEMEYER, Nils, ed., Wilfried BOS, ed., Björn HERMSTEIN, ed.. Schulreform : Zugänge, Gegenstände, Trends. Weinheim: Beltz, 2019, pp. 345-357. ISBN 978-3-407-25820-5
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dc.contributor.author: Maag Merki, Katharina
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(2019): Innere Differenzierung im Unterricht mit jugendlichen Asylsuchenden und Geflüchteten aus der Sicht von Lehrpersonen WITTMANN, Eveline, ed. and others. Jahrbuch der berufs- und wirtschaftspädagogischen Forschung 2019. Berlin: Budrich, 2019, pp. 59-74. ISBN 978-3-8474-2330-0
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dc.contributor.author: Reinke, Hannes; Frim, Anja; Heinrichs, Karin
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dc.contributor.editor: Holtsch, Doreen; Oepke, Maren
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(2019): McPherson et al. (2001) : Birds of a Feather : Homophily in Social Networks HOLZER, Boris, ed., Christian STEGBAUER, ed.. Schlüsselwerke der Netzwerkforschung. Wiesbaden: Springer VS, 2019, pp. 399-402. ISBN 978-3-658-21741-9. Available under: doi: 10.1007/978-3-658-21742-6_92
Mertons Beitrag ist in dem von Lazarsfeld und Stanton herausgegebenen Sammelband Communications Research erschienen. Der Sammelband ist als Nachfolgeprojekt der zuvor zweimal erschienen Reihe Radio Research zu verstehen, in der Ergebnisse von Forschungsarbeiten unter der Federführung von Lazarsfeld zur Wirkung des Radios als Massenmedium vorgestellt werden. In Communications Research werden vor allem Erkenntnisse aus Studien präsentiert, die während und nach dem zweiten Weltkrieg vom Bureau of Applied Social Research der Columbia University durchgeführt wurden (Stanton und Lazarsfeld 1950).
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(2019): Financial Market Misconduct and Public Enforcement : The Case of Libor Manipulation Management Science. 2019, 65(11), pp. 4951-5448. ISSN 0025-1909. eISSN 1526-5501. Available under: doi: 10.1287/mnsc.2018.3065
Using comprehensive data on London Interbank Offer Rate (Libor) submissions from 2001 through 2012, we provide evidence consistent with banks manipulating Libor to profit from Libor-related positions and to signal their creditworthiness during distressed times. Evidence of manipulation is stronger for banks that were eventually sanctioned by regulators and disappears for all banks in the aftermath of the Libor investigations that began in 2010. Our findings suggest that the threat of large penalties and the loss of reputation that accompany public enforcement can be effective in deterring financial market misconduct.