Discussion Paper No. 543
August 7, 2025
Luck Or Effort: Perceptions of the Role of Circumstances in Education and Demand for Targeted Spending
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Abstract:
Perceptions about students’ personal responsibility for their own success might have crucial implications for public approval of targeted financial support. Using a survey experiment among the German adult population, we find that information about the correlation of education outcomes and parental background strongly increases the perception that external circumstances determine educational success. These effects persist in a follow-up survey conducted two weeks later. Information also significantly increases private donations to charities supporting students from disadvantaged socio-economic backgrounds but does not affect demand for redistributive education spending by the government. This pattern of results is consistent with differences in the perceived opportunity costs of funds used in both spending decisions.
Keywords:
circumstances; effort; information; survey experiment; charitable donations; equality of opportunity; policy preferences;
JEL-Classification:
I24; H52; H11; D83; D63; D64;
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Discussion Paper No. 542
Does Remote Work Reinforce Gender Gaps in (Un)Paid Labor?
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Abstract:
I study how the rise in working from home (WFH) affects the gender division of paid and unpaid labor (caregiving, domestic tasks). Identification uses differences in individuals' exposure to the Covid-induced WFH shock, measured by the WFH feasibility of their job in 2019. Using panel data from the German SOEP, I estimate 2SLS models that instrument realized WFH in 2022 with WFH feasibility. Results show that WFH reduces paid hours and increases domestic work and leisure (including sleep) among women. Men's time use remains largely unchanged, partly because WFH induces moves toward larger, more distant homes, offsetting commuting time savings. Within-couple analyses confirm that the Big Shift to WFH intensifies gender gaps in paid and unpaid work, particularly caregiving. I find that gender norms, bargaining power, and childcare demands interact with WFH in ways that reinforce the unequal division of labor.
Keywords:
work from home; time use; unpaid work; division of labor; gender norms; bargaining power;
JEL-Classification:
J16; J22; J13;
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Discussion Paper No. 541
July 31, 2025
Monetizing Digital Content with Network Effects
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Abstract:
We design profit-maximizing mechanisms to sell an excludable and non-rival good with positive and/or negative network effects. Buyers have heterogeneous private values that depend on how many others also consume the good. In optimum, an endogenous number of the highest types consume the good, and we can implement this allocation in dominant strategies. We apply our insights to digital content creation, and we are able to rationalize features seen in monetization schemes in this industry such as voluntary contributions, community subsidies, and exclusivity bids.
Keywords:
mechanism design; non-rival goods; club goods; network effects; digital content; creator economy;
JEL-Classification:
D82;
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Discussion Paper No. 540
July 28, 2025
Mean Field Portfolio Games with Epstein-Zin Preferences
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Abstract:
We study mean field portfolio games under Epstein-Zin preferences, which naturally encompass the classical time-additive power utility as a special case. In a general non-Markovian framework, we establish a uniqueness result by proving a one-to-one correspondence between Nash equilibria and the solutions to a class of BSDEs. A key ingredient in our approach is a necessary stochastic maximum principle tailored to Epstein-Zin utility and a nonlinear transformation. In the deterministic setting, we further derive an explicit closed-form solution for the equilibrium investment and consumption policies.
Keywords:
epstein-zin utility; mean field game; stochastic maximum principle;
JEL-Classification:
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Discussion Paper No. 539
Measuring Long-Run Expectations that Correlate with Investment Decisions
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Abstract:
Different methods of eliciting long-run expectations yield data that predict economic choices differently well. We ask members of a wide population sample to make a 10-year investment decision and to forecast stock market returns in one of two formats: they either predict the average of annual growth rates over the next 10 years, or they predict the total, cumulative growth that occurs over the 10-year period. Results show that total 10-year forecasts are more pessimistic than average annual forecasts, but they better predict experimental portfolio choices and real-world stock market participation.
Keywords:
household finance; long-run predictions; survey experiments;
JEL-Classification:
D01; D14; D84; D9;
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Discussion Paper No. 538
Surplus Squeeze and Informational Hold-Up
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Abstract:
We study a static bilateral trade setting with moral hazard, where a seller privately chooses quality and a buyer may pay to verify it. We show that buyer-side information acquisition can lead to informational hold-up through a mechanism wecall surplus squeezing: precise verification enables the seller to extract all buyer surplus, deterring inspection and causing trade to unravel. When verification is noisy, uncertainty preserves buyer surplus and sustains trade. Our framework highlights how strategic responses to learning can distort investment incentives, offering a new perspective on the limits of information precision in mitigating moral hazard.
Keywords:
surplus squeeze; informational hold-up; buyer learning; costly information;
JEL-Classification:
D82; D83;
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Discussion Paper No. 537
Elite Persistence in Family: The Role of Adoption in Prewar Japan
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Abstract:
Why can elite families often maintain their social and economic status over multiple generations? We show that adoption can contribute to the persistence of elite status by utilizing a unique historical framework of prewar Japan. However, the preference for adopted heirs may lead to selection bias in the process of choosing heirs, potentially biasing OLS results negatively. To address this selection bias, we use the gender of the firstborn child as an instrument for the adoption decision. We find that having an adopted heir increases the probability of maintaining elite status in the son’s generation by 27% compared to having a biological heir. Furthermore, we show that this result is driven by matching high-quality adopted sons with fathers who were highly successful in their early lives.
Keywords:
intergenerational transmission; adoption; succession; family; elite;
JEL-Classification:
J12; J13; J62; N35;
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Discussion Paper No. 536
July 13, 2025
Out-of-School Learning: Subtitling vs. Dubbing and the Acquisition of Foreign-Language Skills
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Abstract:
The development of English-language skills, a near necessity in today’s global economy, is heavily influenced by historical national decisions about whether to subtitle or dub TV content. While prior studies of language acquisition have focused on schools, we show the overwhelming influence of out-of-school learning. We identify the causal effect of subtitling in a difference-in-differences specification that compares English to math skills in European countries that do and do not use subtitles. We find a large positive effect of subtitling on English-language skills of over one standard deviation. The effect is robust to accounting for linguistic similarity, economic incentives to learn English, and cultural protectiveness. Consistent with oral TV transmission, the effect is larger for listening and speaking skills than for reading.
Keywords:
language skills; english as a foreign language; tv; movies; dubbing; subtitles;
JEL-Classification:
I21; Z13; L82;
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Discussion Paper No. 535
The Production of Information to Price Discriminate
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Abstract:
We study price discrimination by a monopolistic seller that endogenously produces a market segmentation at a cost, and question the efficiency of the production of market segmentations led by private incentives. We show that the efficient market segmentation gives all the gains in total surplus to the buyer, and the seller profit stays at the uniform profit level. Our result suggests that the private production of information by sellers to price discriminate is significantly inefficient.
Keywords:
price discrimination; cost of information; production of information;
JEL-Classification:
D42; D83; L12;
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Discussion Paper No. 534
June 29, 2025
Paper Tiger? Chinese Science and Home Bias in Citations
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Abstract:
We investigate the phenomenon of home bias in scientific citations, where researchers disproportionately cite work from their own country. We develop a benchmark for expected citations based on the relative size of countries, defining home bias as deviations from this norm. Our findings reveal that China exhibits the largest home bias across all major countries and in nearly all scientific fields studied. This stands in contrast to the pattern of home bias for China’s trade in goods and services, where China does not stand out from most industrialized countries. After adjusting citation counts for home bias, we demonstrate that China’s apparent rise in citation rankings is overstated. Our adjusted ranking places China fourth globally, behind the US, the UK, and Germany, tempering the perception of China’s scientific dominance.
Keywords:
home bias; knowledge flows; citation patterns; china; science;
JEL-Classification:
F14; F6; F15; O3; O33;