Discussion Paper No. 512
October 9, 2024
Employee Performance and Mental Well-Being: The Mitigating Effects of Transformational Leadership During Crisis
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Abstract:
The positive role of transformational leadership for productivity and mental wellbeing has long been established. Transformational leadership behavior may be particularly suited to navigate times of crisis which are characterized by high levels of complexity and uncertainty. We exploit quasi-random assignment of employees to managers and study the role of frontline managers’ leadership styles on employees’ performance, work style, and mental well-being in times of crisis. Using longitudinal administrative data and panel survey data from before and during the Covid-19 pandemic, we find that the benefits of different leadership styles depend on the environment: Employees of more transactional managers outperform those of more transformational leaders before the onset of the pandemic. During the pandemic, however, more transformational managers lead employees to better performance and mental well-being. We discuss potential explanations and implications.
Keywords:
leadership; frontline managers; labor-management relations; organizational behavior; crisis;
JEL-Classification:
M54; M12; J53;
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Discussion Paper No. 511
September 29, 2024
Losing the Country: Debt, Deflation, and the Rural Rise of the Nazi Party
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Using interwar German agriculture as a case, this paper explores the political cost of debt deflation which we characterize with farmers' leverage ratios. Primary deficits drove their increase during 1924-1928, but deflation pushed them to unsustainable levels during 1929-1932. We construct corresponding exogenous county-level exposure measures and show their effect on economic distress as well as political radicalization. Our results suggest that debt deflation increased the Nazi party's rural vote share by over 8 percentage points relative to a counterfactual baseline scenario and was thus a necessary condition for its rural dominance and ascension to parliamentary power.
Keywords:
great depression; weimar germany; nsdap; extremism; debt deflation; economic crisis;
JEL-Classification:
D72; N13; N54;
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Discussion Paper No. 510
September 19, 2024
Motivated Political Reasoning: On the Emergence of Belief-Value Constellations
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We study the relationship between moral values (“ought” statements) and factual beliefs (“is” statements). We show that thinking about values affects the beliefs people hold. This effect is mediated by prior political leanings, thereby contributing to the polarization of factual beliefs. We document these findings in a pre-registered online experiment with a nationally representative sample of over 1,800 individuals in the US. We also show that participants do not distort their beliefs in response to financial incentives to do so, suggesting that deep values exert a stronger motivational force than financial incentives.
Keywords:
motivated beliefs; values; polarization; experiment; reasoning;
JEL-Classification:
C90; D72; D74; D83; P16;
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Discussion Paper No. 509
August 8, 2024
Substitution Patterns and Price Response for Plant-Based Meat Alternatives
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Efforts to promote sustainable resource use through reduced meat consumption face challenges as global meat consumption persists. The resistance may be attributed to the lower sales price of meat compared to most plant-based meat alternatives (PBMAs). Addressing this, our research delves into the pivotal question of which PBMAs resonate most with consumers and how pricing affects demand. In a hypothetical restaurant context, we conducted 2 representative studies among 2,126 individuals in the U.S. to scrutinize preferences for meat, analog, semi-analog, and non-analog burgers. First, in a survey, we assessed rankings of the four burgers, alongside evaluating participants' genuine consideration of these choices to discern a diverse preference distribution. Subsequently, in an experiment, we examined the influence of prices on participants' consideration and choice of PBMAs, thereby capturing both phases of the decision-making process. Our survey shows that meat has considerably higher utility and consumer preference than all PBMAs on average, but we also find substantial heterogeneity (i.e., some consumers prefer PBMAs over meat). In the experiment, we establish that there is a negative association between the consideration of meat and PBMA burgers, though consideration of any one PBMA is positively associated with considering other PBMAs. A noteworthy increase in consideration and choice is observed when prices of PBMAs are reduced, while changing the price of the meat burger only has minimal effect on demand. Such findings underscore the importance of affordability beyond price parity in catalyzing the shift towards plant-based diets.
Keywords:
Plant-based meat; Food decision making; Sustainability; Price elasticity;
JEL-Classification:
M31; L66; Q56; C11; C35;
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Discussion Paper No. 508
July 31, 2024
Measuring Preferences for Algorithms
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We suggest a simple method to elicit individual preferences for algorithms. By altering the monetary incentives for ceding control to the algorithm, the menu-based approach allows for measuring, in particular, the degree of algorithm aversion. Using an experiment, we elicit preferences for algorithms in an environment with measurable performance accuracy under two conditions|the absence and the presence of information about the algorithm's performance. Providing such information raises subjects' willingness to rely on algorithms when ceding control to the algorithm is more costly than trusting their own assessment. However, algorithms are still underutilized.
Keywords:
algorithm aversion; delegation; experiment; preferences;
JEL-Classification:
C91; D83; D91;
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Discussion Paper No. 507
July 15, 2024
Strategic Use of Unfriendly Leadership and Labor Market Competition: An Experimental Analysis
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A significant portion of the workforce experiences what we term `unfriendly leadership,' encompassing various forms of hostile behavior exhibited by managers. The motivations driving managers to adopt such behaviors are insufficiently understood. To explore this phenomenon, we conducted a laboratory experiment examining the relationship between managers' use of unfriendly leadership and labor market competition. We discern two labor market states: excess labor demand, where managers compete to hire workers, and excess labor supply, where workers compete to be hired. By perceiving unfriendly leadership as a performance-contingent punishment device inflicting discomfort on workers, we hypothesize that managers are less inclined to resort to unfriendly leadership when they compete to hire workers. We find that managers tend to engage in unfriendly leadership more frequently and intensely under excess labor supply, in comparison to excess labor demand. This trend is particularly pronounced among male participants. Additionally, workers display a decreased likelihood of accepting employment offers from more unfriendly managers and exert lower levels of effort when working under such managers, indicating that unfriendly leadership is costly.
Keywords:
leadership style; labor market competition; non-monetary incentives;
JEL-Classification:
L20; M14; M55;
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Discussion Paper No. 506
July 8, 2024
Fairness in a Society of Unequal Opportunities
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Modern societies are characterized by widespread disparities in opportunities, which play a crucial role in creating income inequality. This paper investigates how individuals handle income inequality arising from these unequal opportunities. We report from a large-scale experimental study involving general populations in the United States and Scandinavia, where participants make consequential redistributive decisions as third-party ‘spectators’ for workers who faced unequal opportunities. Our findings provide strong evidence that a significant majority of people are willing to accept inequality caused by unequal opportunities, a position that markedly contrasts with their responses to inequality caused by luck. Two distinct forces drive greater acceptance of inequality under unequal opportunities: the tendency to mistakenly attribute the impact of unequal opportunities to inherent productivity, and the moral relevance attributed to choice differences caused by unequal opportunities. We further demonstrate a clear societal and political divide in responses to unequal opportunities, with Americans and right-wing voters exhibiting a greater acceptance of the resulting inequality, reflecting both differences in fairness views and attribution biases in these populations.
Keywords:
unequal opportunities; inequality acceptance; attribution bias; fairness views;
JEL-Classification:
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Discussion Paper No. 505
May 23, 2024
Do Narratives about Psychological Mechanisms Affect Public Support for Behavioral Policies?
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Behavioral policy, such as leveraging defaults, is increasingly employed by governments worldwide, but has sometimes faced public backlash, which limits political feasibility. We conducted a survey experiment with a large, representative sample to explore how the narrative describing the psychological mechanism by which a default rule impacts a socially significant outcome affects public approval. Respondents are presented with a vignette in which an unemployed person follows a default to participate in further training. We experimentally vary the narrative about his reasons for doing so. Compared to the baseline condition in which no information on the psychological mechanism is provided, voluntary ignorance, involuntary ignorance, perceived social expectations and perceived social pressure each reduce policy approval. These factors also lead to more negative perceptions of the default rule's impact on the decision maker’s welfare and autonomy. The benign mechanism of deliberate endorsement, however, does not significantly raise approval or perceptions. We show that these findings hold irrespective of assumed preferences and discuss their practical implications.
Keywords:
behavioral policy; public support; psychological mechanisms; default rule;
JEL-Classification:
D91; D83; I31; J68;
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Discussion Paper No. 504
Principled Mechanism Design with Evidence
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We cast mechanism design with evidence in the framework of Myerson (1982), whereby his generalized revelation principle directly applies and yields standard notions of incentive compatible direct mechanisms. Their specific nature depends on whether the agent's (verifiable) presentation of evidence is contractually controllable, however. For deterministic implementation, we show that, in general, such control has value, and we offer two independent conditions under which this value vanishes, one on evidence (WET) and another on preferences (TIWO). Allowing for fully stochastic mechanisms, we also show how randomization generally has value and clarify to what extent this value vanishes under the common assumption of evidentiary normality (NOR). While, in general, the value of control extends to stochastic implementation, neither control nor randomization have any value if NOR holds together with WET or TIWO.
Keywords:
mechanism design; revelation principle; evidence; verifiable information; value of control; value of randomization;
JEL-Classification:
D82;
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Discussion Paper No. 503
April 18, 2024
The Double Dividend of Nudges
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Nudge-based policies are an important instrument for many policymakers. Based on a laboratory experiment featuring a dual-task paradigm, we examine the effects of two common types of nudge interventions—the simplification of complex decisions and the implementation of high-quality defaults. We find that these interventions do not only improve choices in the targeted domain, but also yield substantial positive indirect effects on non-targeted domains. The latter emerge through a reallocation of cognitive resources. Furthermore, the relative importance of direct and indirect effects varies systematically across the population. Evaluations that focus only on the targeted domain therefore significantly underestimate the interventions’ overall effectiveness and provide a biased assessment of their distributional consequences.
Keywords:
nudges; default options; administrative burden; limited attention; limited cognitive resources; behavioral economics; laboratory experiment;
JEL-Classification: