Publications

This paper demonstrates that the likelihood of tacit collusion in a given oligopolistic industry may depend on the kind of liability rule applied to the industry. We study typical settings for the analysis of product liability and environmental liability. For the latter, it is established that tacit collusion is more likely under strict liability than under negligence. However, the two liability rules are equivalent with regard to their effects on tacit collusion in the model pertaining to product liability. This context-dependent impact on tacit collusion can be traced back to a difference in the shape of firms’ cost functions.

We analyze the effects of the unprecedented rise in trade between Germany and “the East” (China and Eastern Europe) in the period 1988–2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of the East in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 442,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. This is almost exclusively driven by the rise of Eastern Europe, not by China. We also conduct an analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships.

Abstract This study tests the two assumptions underlying popularly held notions that maternal employment negatively affects children because it reduces time spent with parents: (1) that maternal employment reduces children’s time with parents, and (2) that time with parents affects child outcomes. We analyze children’s time-diary data from the Child Development Supplement of the Panel Study of Income Dynamics and use child fixed-effects and IV estimations to account for unobserved heterogeneity. We find that working mothers trade quantity of time for better “quality” of time. On average, maternal work has no effect on time in activities that positively influence children’s development, but it reduces time in types of activities that may be detrimental to children’s development. Stratification by mothers’ education reveals that although all children, regardless of mother’s education, benefit from spending educational and structured time with their mothers, mothers who are high school graduates have the greatest difficulty balancing work and childcare. We find some evidence that fathers compensate for maternal employment by increasing types of activities that can foster child development as well as types of activities that may be detrimental. Overall, we find that the effects of maternal employment are ambiguous because (1) employment does not necessarily reduce children’s time with parents, and (2) not all types of parental time benefit child development.

While rising unemployment generally reduces people’s happiness, researchers argue that there is a compensating social-norm effect for the unemployed individual, who might suffer less when it is more common to be unemployed. This empirical study rejects this thesis for German panel data, however, and finds that individual unemployment is even more hurtful when regional unemployment is higher. On the other hand, an extended model that separately considers individuals who feel stigmatised from living off public funds yields strong evidence that this group of people does in fact suffer less when the normative pressure to earn one’s own living is lower. A comprehensive discussion reconciles these findings with the existing research and concludes that to find evidence for the often described social-norm effect it is worthwhile to analyse disutility associated with benefit receipts.

We find an asymmetric pass-through of European emission allowance (EUA) prices to wholesale electricity prices in Germany and show that this asymmetry disappeared in response to a report on investigations by the competition authority. The asymmetric pricing pattern, however, was not detected at the time of the report, nor had it been part of the investigations. Our results therefore provide evidence for the deterring effect of regulatory monitoring on firms which exhibit non-competitive pricing behavior. We do not find any asymmetric pass-through of EUA prices in recent years. Several robustness checks support our results.

Numerous hedge funds stop reporting each year to commercial databases, wreaking havoc with analyzing investment strategies that incur the unobserved delisting return. We use estimated portfolio holdings for funds-of-funds to back out estimated hedge-fund delisting returns. For all exiting funds, the estimated mean delisting return is insignificantly different from the average monthly return for live hedge funds. However, funds with poor prior performance and no clearly stated delisting reason had a significantly negative estimated mean delisting return of -5.97%, suggesting that a shock to their returns “tips them over the edge” and leads to delisting.

This paper uses experimental data to analyze how competitive behavior is influenced by coaching and peer observation. We study behavior in a sequential contest, considering information about the effort level of subjects in other contests (observation of peers) and information about the payoff-maximizing effort level (coaching) as treatment variables. Presentation of peer effort has a significant impact on the effort levels of first movers but not on second movers’ effort levels. The decisions of second movers were positively influenced by coaching when this information was presented alone; however, when coaching was presented in combination with peer observation, this effect decreased.

Rationale
People often face decisions that pit self-interested behavior aimed at maximizing personal reward against normative behavior such as acting cooperatively, which benefits others. The threat of social sanctions for defying the fairness norm prevents people from behaving overly selfish. Thus, normative behavior is influenced by both seeking rewards and avoiding punishment. However, the neurochemical processes mediating the impact of these influences remain unknown. Several lines of evidence link the dopaminergic system to reward and punishment processing, respectively, but this evidence stems from studies in non-social contexts.

Objectives
The present study investigates dopaminergic drug effects on individuals' reward seeking and punishment avoidance in social interaction.

Methods
Two-hundred one healthy male participants were randomly assigned to receive 300 mg of l-3,4-dihydroxyphenylalanine (L-DOPA) or a placebo before playing an economic bargaining game. This game involved two conditions, one in which unfair behavior could be punished and one in which unfair behavior could not be punished.

Results
In the absence of punishment threats, L-DOPA administration led to more selfish behavior, likely mediated through an increase in reward seeking. In contrast, L-DOPA administration had no significant effect on behavior when faced with punishment threats.

Conclusions
The results of this study broaden the role of the dopaminergic system in reward seeking to human social interactions. We could show that even a single dose of a dopaminergic drug may bring selfish behavior to the fore, which in turn may shed new light on potential causal relationships between the dopaminergic system and norm abiding behaviors in certain clinical subpopulations.

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dc.contributor.author: Käser, Philipp A.W.; König, Cornelius J.; Kleinmann, Martin

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This paper compares the performance of a due care standard which is tailored to individual precaution costs to that of the reasonable person standard. This is done in a framework in which injurers can reduce their precaution costs via investment in progressing care technology. We show that the reasonable person standard may invoke better investment incentives, pointing to a potential trade-off between static and dynamic efficiency.