The role of communication content and reputation in the choice of transaction partners: A study based on field and laboratory data

We study the effects of communication content and its interaction with reputation on the choice of transaction partners in markets with moral hazard. We find that buyers' choices of sellers are influenced by prices and reputation information as well as by sellers' messages: buyers prefer sellers who make specific promises. If specific promises are infeasible, buyers prefer sellers whose arguments reduce the social distance. These observations do not depend on the availability of reputation information. We also find that, if specific promises are feasible, buyers' profits do not significantly differ from hypothetical profits realized under a correct expectations rule

Does truth win when teams reason strategically?

We study behavior in the race game with the aim of assessing whether teams can create synergies. The race game has the advantage that the optimal strategy depends neither on beliefs about other players nor on distributional or efficiency concerns. Our results reveal that teams not only outperform individuals but that they can also beat the “truth-wins” benchmark. In particular, varying the length of the race game we find that the team advantage increases with the complexity of the game

A Reform Strategy for Germany

In this chapter, we outline a reform strategy to promote a more entrepreneurial society in Germany. Germany has developed a successful model of capitalism in which high productivity growth is driven by on-the-job learning and firm-specific skill accumulation. The economy is rooted in a strong and regionally embedded Mittelstand, which supports an export-oriented industry mainly based on incremental innovations, but which is less conducive to more radical innovation. We, therefore, suggest a reform agenda for Germany that encourages more entrepreneurial experimentation with the aim of facilitating radical innovation, both in incumbent and new firms. Germany’s entrepreneurial talent should be encouraged to take on more risk, the education system could promote initiative, creativity and a willingness to experiment, and a more equal playing field between dependent employment and self-employment/employer could be created

Selling Money on Ebay: A Field Study of Surplus Division

We study the division of trade surplus in a competitive market environment by conducting a natural field experiment on German eBay. Acting as a seller, we offer Amazon gift cards with face values of up to 500 Euro. Randomly arriving buyers, the subjects of our experiment, make price offers according to eBay rules. Using a novel decomposition method, we infer offered shares of trade surplus and find that the average share proposed to the seller amounts to 29%. Additionally, we document: (i) insignificant effects of stake size; (ii) poor use of strategically relevant public information; and (iii) behavioural differences between East and West German subjects

Altruism Heterogeneity and Quality Competition Among Healthcare Providers

New empirical evidence shows substantial heterogeneity in the altruism of healthcare providers. Spurred by this evidence, we build a spatial quality competition model with altruism heterogeneity. We find that more altruistic healthcare providers supply relatively higher quality levels and position themselves closer to the center. Whether the social planner prefers more or less horizontal differentiation is in general ambiguous and depends on the level of altruism. The more altruistic healthcare providers are, the more likely it is that the social planner prefers greater horizontal differentiation to offset costly quality competition.Neue empirische Evidenz für Leistungsanbieter im Gesundheitswesen zeigt, dass es erhebliche Heterogenität im Grad des Altruismus gibt. Auf Basis dieser neuen Evidenz entwickeln wir ein räumliches Wettbewerbsmodell, in dem Leistungsanbieter mittels Qualität konkurrieren und das für Heterogenität im Grad des Altruismus erlaubt. Wir finden, dass Leistungsanbieter, die durch einen relativ höheren Grad an Altruismus gekennzeichnet sind, auch höhere Qualitäten anbieten und sich zentraler allokieren (niedrigere horizontale Differenzierung). Ob aus der sozialen Perspektive mehr oder weniger horizontale Differenzierung bevorzugt wird, hängt von dem Grad des Altruismus ab. Je höher der Grad des Altruismus, desto wahrscheinlicher ist es, dass der Sozialplaner mehr horizontale Differenzierung bevorzugt, um den Qualitätswettbewerb einzuschränken

Non-Take-Up of Student Financial Aid: A Microsimulation for Germany

This paper estimates the percentage of students who do not take up their federal need-based student financial aid entitlements and sheds light on determinants of this behavior. Against the background that educational mobility in Germany is low although extensive student financial aid for needy students is available, it is crucial to know whether students assert their claims for student aid at all. To investigate non-take-up, we set up a microsimulation model for the German Socio-Economic Panel Study 2002-2013 and estimate the respective aid amounts students would have received, had they filed an application for need-based aid. The results indicate that about 40% of the eligible low-income students do not take up their entitlements. We employ instrumental variable techniques and a sample selection model to consider several potential explanatory factors for this behavior. Our results suggest that non-take-up is inversely related to the level of benefits, though the elasticity is rather low. Apart from that, a shorter expected duration of benefit receipt is related to a higher non-take-up rate, whereas the possibility to draw upon older siblings' experience with completing the complex application for aid is associated with higher probabilities to claim. Moreover, we find robust evidence that significantly more students socialized in the former socialist East Germany choose to take up student aid than similar West German students. Finally, in line with behavioral economic theory, debt aversion of highly impulsive and impatient students is associated with higher rates of non-take-up

Top-Down vs. Bottom-Up: The Long-Term Impact of Government Ideology and Personal Experience on Values

This paper studies the long-term impact of societal socialization on values using the example of doping behavior in sports. We apply the German Reunification Approach to the microcosm of Berlin and exploit its 40-year long division into a capitalist and a communist sector. We deliberately chose attitudes toward doping to test the impact of ideology on values since (i) post-1989 disappointed economic hopes did not confound doping attitudes, and because of (ii) the systematic GDR state doping activities that became public in reunified Germany in the 1990s. Our findings demonstrate that even after half the time the division lasted, e.g. 20 years after the reunification, differences in convictions continue to persist. Personal extramural sports experience and age are equally strong predictors of individual attitudes and beliefs, especially in interaction with ideological socialization

Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: A tale of two regions

Studies on the influence of entrepreneurial role models (peers) on the decision to start a firm ar-gue that entrepreneurial role models in the local environment (1) provide opportunities to learn about entrepreneurial tasks and capabilities, and (2) signal that entrepreneurship is a favorable career option thereby reducing uncertainty that potential entrepreneurs face. However, these studies remain silent about the role of institutional context for these mechanisms. Applying an ex-tended sender-receiver model, we hypothesize that observing entrepreneurs reduces fear of fail-ure in others in environments where approval of entrepreneurship is high while this effect is signif-icantly weaker in low approval environments. Taking advantage of the natural experiment from recent German history and using data from the Global Entrepreneurship Monitor Project (GEM), we find considerable support for our hypotheses

Dictator Games: A Meta Study

Over the last 25 years, more than a hundred dictator game experiments have been published. This meta study summarizes the evidence. Exploiting the fact that most experiments had to fix parameters they did not intend to test, the meta study explores a rich set of control variables for multivariate analysis. It shows that Tobit models (assuming that dictators would even want to take money) and hurdle models (assuming that the decision to give a positive amount is separate from the choice of amount, conditional on giving) outperform mere meta-regression and OLS