Discussion Paper No. 575
June 3, 2026
Talking Across the Aisle
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Abstract:
We conduct an experiment that engages U.S. Democrats and Republicans in video conversations about policy-relevant facts. We study self-selection into conversations and their effect on information aggregation and affective polarization. Participants prefer co-partisan conversations, believing cross-partisan conversations to be less informative and less pleasant. There is more to learn from counter-partisans, but participants find it harder to extract knowledge from them. Our rich audiovisual data reveal that co- and cross-partisan conversations are strikingly similar in content and tone. Yet, knowledge extraction is impeded by participants' persistent lack of trust in the knowledge of counter-partisans. In contrast, cross-partisan interactions prove more enjoyable than anticipated and significantly reduce affective polarization, an effect that persists in an obfuscated follow-up survey three months later. More emotionally engaged conversations produce larger reductions in affective polarization. Policies encouraging cross-partisan interactions may be more successful at reducing affective polarization than at promoting information aggregation.
Keywords:
cross-partisan interactions; partisan sorting; echo chambers; information diffusion; affective polarization; misperceptions;
JEL-Classification:
C93; D83; D9;
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Discussion Paper No. 574
June 1, 2026
Social Anxiety and Evaluative Interviews
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Abstract:
Evaluative social interactions are pervasive in labor markets. Inequality in these settings can arise not only from how individuals are treated or perform when evaluated, but from whether they enter evaluation at all. We study these margins in the context of social anxiety. In a controlled online experiment (N = 922), applicants decide whether to complete a live video interview that determines a monetary hiring bonus. We find that inequities associated with social anxiety are concentrated in participation rather than in performance or treatment. Socially anxious applicants are substantially less willing to interview, hold more pessimistic beliefs about being hired, and correctly anticipate a worse experience. Yet they perform no worse and are evaluated no differently. Interview experience does not attenuate the relative pessimism of socially anxious individuals, a pattern that is inconsistent with Bayesian updating under comparable signals. We use our rich audio-visual data and open-ended reflection texts to show that, instead, socially anxious applicants interpret similar interactions more negatively. We then provide evidence on organizational interventions aimed at closing social anxiety gaps. Finally, we show that social anxiety explains a meaningful share of inequalities commonly attributed to gender and social skill differences and is associated with significant earnings gaps in national data.
Keywords:
social anxiety; job interviews; beliefs; mental health; discrimination; learning;
JEL-Classification:
D83; J71; I10; C90;
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Discussion Paper No. 573
May 21, 2026
Private Interest in the Public Good: Cholera and the Origins of Sanitary Reform
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Abstract:
European countries paved the way for modern economic growth in the 19th century with large-scale reforms facilitating human capital accumulation. The literature has looked at the role of elites in broad education investments, but less attention has been devoted to reforms promoting workers' health, a key component of human capital. This paper studies the impact of the 1866 cholera outbreak on modern waterworks construction in the German Empire to test the hypothesis whether concerns about workers' health may have compelled elites to invest in health-enhancing public goods. We find that the epidemic raised the annual probability of building waterworks by about 35%. Exogenous variation relying on the cholera-spreading effect of military movements during the Austro-Prussian War in 1866 further underpins this result. Quantitative and qualitative evidence indicates that non-agricultural elites employing more productive capital and better-skilled workers pushed for reform to avoid the costly prospect of future labour shocks. Long-term analyses show sizeable and persisting effects of the epidemic on public health and development outcomes shortly before the First World War.
Keywords:
political economy; public goods; sanitation; cholera; elites;
JEL-Classification:
H41; H54; I18; N33; N93;
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Discussion Paper No. 572
May 14, 2026
Some Simple Economics of Green Markets
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Policymakers seek to reduce environmentally harmful production by leveraging consumers' demand for low-externality products. Should the exchange of such products be organized under the standard principle of ``one market for one good", creating a separate market for green goods and integrating regional green markets? We show that this reduces harmful production if and only if green demand is sufficiently strong relative to green supply. Otherwise, a ``demand displacement effect" arises: stronger demand for green goods induces substitution toward brown goods, thereby increasing externalities. This effect interacts with other policy instruments.
Keywords:
green markets; socially responsible consumers; externalities; market segmentation; demand displacement; environmental policy;
JEL-Classification:
D62; D64; Q58;
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Discussion Paper No. 571
April 29, 2026
Housing Supply, Property Insurance, and Exposure to Wildfire Risk
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Abstract:
In the past two decades, about half of the new homes in the United States were built in areas at risk of natural hazards. Why is residential development exposed to such risk? I argue that regulated property-insurance pricing and land-use regulations contribute to this pattern. I study this mechanism in the metropolitan area of San Diego, California, where insurance rules compress the premium gradient with respect to wildfire risk and safer locations are highly regulated and built out. Using detailed spatial data on zoning, wildfire risk, housing, commuting, and premiums, I estimate a quantitative urban model of household location choice, housing supply, and insurance supply. The estimates imply that wildfire premiums are 10.5% below actuarially fair pricing, that the average amenity cost of current wildfire risk is equivalent to 3.5% of income, and that the total present-value welfare cost of current wildfire risk, including property damages, is $17.5 billion. This aggregate cost masks substantial incidence heterogeneity, as owners of safe land benefit from equilibrium scarcity effects. Counterfactuals show that housing supply and insurance pricing interact in determining incidence. In the benchmark specification, targeted housing reforms leave the aggregate effect of cost-based insurance nearly unchanged while attenuating its burden on workers: relative to baseline, workers' wildfire costs rise by 2.3% under insurance reform alone, but fall by 0.9% under the joint reform.
Keywords:
climate; environment; natural disasters; wildfires; spatial; urban; land-use regulation; zoning;
JEL-Classification:
O18; Q54; Q56; R23; R31; R52;
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Discussion Paper No. 570
April 15, 2026
Open Science in den Wirtschaftswissenschaften: Transparenz, Reproduzierbarkeit und Zugang
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Der Beitrag diskutiert Open Science in den Wirtschaftswissenschaften als Bündel von Praktiken zur Verbesserung von Transparenz, Reproduzierbarkeit und Zugänglichkeit wissenschaftlicher Forschung. Der Artikel zeigt, dass Präregistrierungen und Registered Reports, Open Data und Open Code sowie Open Access die Glaubwürdigkeit empirischer Forschung stärken können, zugleich aber disziplinspezifische Grenzen und Zielkonflikte berücksichtigen müssen. Für die Wirtschaftswissenschaften und die Forschungsförderung folgt daraus die Notwendigkeit verlässlicher Infrastrukturen, klarer Standards und nachhaltiger institutioneller Unterstützung, insbesondere für nicht-kommerzielle Open-Access-Modelle wie Diamond Open Access.
Keywords:
open science; präregistrierung; reproduzierbarkeit; open access;
JEL-Classification:
B41; C81; I23;
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Discussion Paper No. 569
April 2, 2026
How Platform Endorsement Shapes Consumer Search and Choice in Online Retail
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Platform endorsement badges (e.g., Amazon's Choice) are widely believed to shape consumer decisions, yet their effectiveness in complex retail environments---where endorsements compete with rankings, ratings, and other signals---remains not well understood. This article examines Amazon's product-level endorsements using a multi-method approach combining (1) a 50-day large-scale audit of more than 200,000 search results spanning over 90,000 products and (2) a lab-in-the-field experiment that manipulates badge visibility and placement in consumers' natural shopping context. The audit reveals that endorsements are rare (~1.3% of products) and disproportionately assigned to products with lower prices, higher ratings, and those sold or fulfilled by Amazon; receiving a badge is associated with greater search visibility and improved sales performance. The experiment shows that displaying the badge tends to increase click-through and add-to-cart likelihoods, whereas reassigning or masking it tends to reduce these behaviors; however, these effects---while economically meaningful---are estimated with uncertainty, consistent with a multi-cue environment in which endorsement competes with other signals such as search rank and Prime eligibility. Together, the findings indicate that platform endorsement badges shape consumer search and choice behavior even in information-rich retail settings. Implications are discussed for platform design, seller strategy, and regulatory oversight.
Keywords:
platform endorsements; consumer decision-making; digtial platforms; e-commerce experimentation;
JEL-Classification:
D12; D83; L86; M31;
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Discussion Paper No. 568
April 1, 2026
The Global Variation in Risk and Time Preferences
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A growing body of empirical research has developed measures of economic preferences related to risk taking and intertemporal choice. This research has documented pronounced heterogeneity in preferences across and within societies, and also provided evidence that these differences are culturally transmitted. This chapter discusses existing data sets that allow for a comparable measurement across the globe, takes stock of commonalities and differences in approaches, and presents an extended synthetic cross-country data set that combines information from existing data sets. The analysis then establishes various empirical regularities, such as broadly similar patterns of heterogeneity across the globe, revealed by the different datasets, but also some systematic divergences by measurement approach, and substantial correlations of economic preferences with country-aggregate and individual-level outcomes and traits. We also briefly discuss international data sets measuring social preferences, and end with an outlook on avenues for future research.
Keywords:
willingness to take risks; patience;
JEL-Classification:
D1;
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Discussion Paper No. 567
March 25, 2026
Exchange Rate Appreciation and Structural Adjustment: Evidence from the Plaza Accord
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Large exchange rate appreciations pose a fundamental challenge for open economies: they compress export margins, weaken competitiveness, and force firms and regions to adjust their production and employment structures. However, evidence on how such adjustments unfold over the long run remains limited. This paper studies these mechanisms using Japan’s sharp yen appreciation following the 1985 Plaza Accord. Combining a firm-level panel data from 1980 to 1999 with industry-level shock exposure, I estimate how appreciation affected firms’ employment, sales, and labor productivity. The results show sharp declines in sales and productivity but modest employment losses, reflecting Japan’s rigid labor practices. Industries more exposed to export shocks expanded FDI in Asia without inducing additional domestic employment adjustment, but leading to a sharper decline in measured labor productivity. At the regional level, labor reallocation from manufacturing to services occurred in shock-exposed regions, suggesting that the yen appreciation led to gradual structural transformation.
Keywords:
exchange rate; trade policy; firm; plaza accord; structural transformation;
JEL-Classification:
F14; F38; F68;
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Discussion Paper No. 566
Providing Benefits to Uninformed Workers
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Abstract:
This paper develops a dynamic search model in which certain ``hidden attributes" are revealed only after acceptance of an offer and may trigger continued search in the following period. The model is applied to study how workers' imperfect information about pecuniary workplace benefits (such as employer-sponsored pension and health insurance plans) during job search, and the subsequent realization of these benefits on the job, affect the multidimensional compensation packages offered in equilibrium by profit-maximizing firms. I find that unobservability of benefits prior to acceptance distorts firms' incentives toward providing inefficiently low benefits, despite the fact that lower benefits induce higher worker turnover. Furthermore, when workers differ in strategic sophistication, and therefore hold different beliefs about unobservable benefits, there exist equilibria with spurious differentiation in compensation packages. In these equilibria, the wage differential is bounded from above by the benefit differential. The model demonstrates how imperfect information about workplace benefits can explain several empirical puzzles, including inefficiently low benefit provision and large between-firm dispersion in benefits.
Keywords:
exploitative contracting; hidden attributes; job search; workplace benefits; compensating differentials;
JEL-Classification:
D83; D91; J31; J32; J33;