Discussion Papers

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Discussion Paper No. 306
December 1, 2021

Self-Persuasion: Evidence from Field Experiments at International Debating Competitions

Authors:
Schwardmann, Peter (Carnegie Mellon University)
Tripodi, Egon (University of Essex and JILAEE)
van der Weele, Jol J. (University of Amsterdam and Tinbergen Institute)
Abstract:
Laboratory evidence shows that when people have to argue for a given position, they persuade themselves about the position’s factual and moral superiority. Such self-persuasion limits the potential of communication to resolve conflict and reduce polarization. We test for this phenomenon in a field setting, at international debating competitions that randomly assign experienced and motivated debaters to argue one side of a topical motion. We find self-persuasion in factual beliefs and confidence in one’s position. Effect sizes are smaller than in the laboratory, but robust to a one-hour exchange of arguments and a ten-fold increase in incentives for accuracy.
Keywords:
JEL-Classification:
C93; D72; D83; D91
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Discussion Paper No. 305
December 1, 2021

Cursed Consumers and the Effectiveness of Consumer Protection Policies

Authors:
Ispano, Alessandro (CY Cergy Paris Université, CNRS and THEMA)
Schwardmann, Peter (LMU Munich)
Abstract:
We model firms’ quality disclosure and pricing in the presence of cursed consumers, who fail to be sufficiently skeptical about undisclosed quality. We show that cursed consumers are exploited in duopoly markets if firms are vertically differentiated, if there are few cursed consumers, and if average product quality is high. Three common consumer protection policies that work under monopoly, i.e. mandatory disclosure, third party disclosure and consumer education, may all increase exploitation and decrease welfare. Even where these policies improve overall welfare, they often lead to a reduction in consumer surplus. We show that our conclusions hold in extensions with endogenous quality choice and horizontal differentiation.
Keywords:
naive; cursed; disclosure; consumer protection; labeling; competition
JEL-Classification:
C72; D03; D82; D83
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Discussion Paper No. 304
December 1, 2021

Spin Doctors: An Experiment on Vague Disclosure

Authors:
Deversi, Marvin (LMU Munich)
Ispano, Alessandro (CY Cergy Paris Université, CNRS and THEMA)
Schwardmann, Peter (LMU Munich)
Abstract:
Unfavorable news are often delivered under the disguise of vagueness. Our theory-driven laboratory experiment investigates this strategic use of vagueness in voluntary disclosure and asks whether there is scope for policy to improve information transmission. We find that vagueness is profitably deployed by senders to fool those receivers that lack strategic sophistication. Imposing precise disclosure leads to more easily interpretable messages, but results in fewer sender types disclosing at all. Since non- disclosure also systematically misleads naive receivers, the welfare implications of imposing precision are not obvious. However, our model and experiment show that information transmission and the welfare of naive receivers are improved by policies that impose precision. Our results speak to the rules governing firms’ disclosure of quality-relevant information, the disclosure of research findings, and testimonies in a court of law.
Keywords:
communication; naïveté; flexibility; regulation
JEL-Classification:
D82; D83; C72; C92; L15; D04
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Discussion Paper No. 303
November 29, 2021

Aiding Applicants: Leveling the Playing Field within the Immediate Acceptance Mechanism

Authors:
Basteck, Christian (WZB Berlin)
Mantovani, Marco (University of Milan-Bicocca)
Abstract:
In school choice problems, the widely used manipulable Immediate Acceptance mechanism (IA) disadvantages unsophisticated applicants, but may ex-ante Pareto dominate any strategy-proof alternative. In these cases, it may be preferable to aid applicants within IA, rather than to abandon it. In a laboratory experiment, we first document a substantial gap in strategy choices and outcomes between subjects of higher and lower cognitive ability under IA. We then test whether disclosing information on past applications levels the playing field. The treatment is effective in partially reducing the gap between applicants of above- and below-median cognitive ability and in curbing ability segregation across schools, but may leave the least able applicants further behind.
Keywords:
laboratory experiment; school choice; immediate acceptance; strategy-proofness; cognitive ability; mechanism design
JEL-Classification:
C78; C91; D82; I24
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Discussion Paper No. 302
November 29, 2021

The Effects of an Increase in the Retirement Age on Health – Evidence from Administrative Data

Authors:
Barschkett, Mara (DIW Berlin and FU Berlin)
Geyer, Johannes (DIW Berlin and Netspar)
Haan, Peter (DIW Berlin, FU Berlin and Netspar)
Hammerschmid, Anna (DIW Berlin)
Abstract:
This study analyzes the causal effect of an increase in the retirement age on health. We exploit a sizable cohort-specific pension reform for women using two complementary empirical approaches – a Regression Discontinuity Design and a Difference-in-Differences approach. The analysis is based on official records covering all individuals insured by the public health system in Germany and including all certified diagnoses by practitioners. This enables us to gain a detailed understanding of the multi-dimensionality in these health effects. The empirical findings reflect the multi-dimensionality but allow for deriving two broader conclusions. We provide evidence that the increase in the retirement age negatively affects health outcomes as the prevalence of several diagnoses, e.g., mental health, musculoskeletal diseases, and obesity, increases. In contrast, we do not find support for an improvement in health related to a prolonged working life since there is no significant evidence for a reduction in the prevalence of any health outcome we consider. These findings hold for both identifica- tion strategies, are robust to sensitivity checks, and do not change when correcting for multiple hypothesis testing.
Keywords:
Germany; retirement; pension reform; health, ICD-10, regression discontinuity design, difference-in-differences
JEL-Classification:
I10; I12; I18; J14; J18; J26
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Discussion Paper No. 301
November 19, 2021

Optimal Non-Linear Pricing with Data-Sensitive Consumers

Authors:
Krähmer, Daniel (University of Bonn)
Strausz, Roland (HU Berlin)
Abstract:
We introduce consumers with intrinsic privacy preferences into the monopolistic non-linear pricing model. Next to classical consumers, there is a share of data-sensitive consumers who incur a privacy cost if their purchase reveals information to the monopolist. The monopolist discriminates between privacy types using privacy mechanisms which consist of a direct mechanism and a privacy option, targeting, respectively, classical and data-sensitive consumers. We show that a privacy mechanism is optimal if privacy costs are large and that it yields classical consumers a higher utility than data-sensitive consumers with the same valuation. If, by contrast, privacy preferences are public information, data-sensitive consumers with a low valuation obtain a strictly higher utility than classical consumers. With public privacy preferences, data-sensitive consumers and the monopolist are better off, whereas classical consumers are worse off. Our results are relevant for policy measures that target the data-awareness of consumers, such as the European GDPR.
Keywords:
optimal non-linear pricing; privacy; monopolistic screening
JEL-Classification:
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Discussion Paper No. 300
November 16, 2021

Face Mask Use and Physical Distancing Before and After Mandatory Masking: No Evidence on Risk Compensation in Public Waiting Lines

Authors:
Seres, Gyula (HU Berlin)
Balleyer, Anna (University of Groningen)
Cerutti, Nicola (Mercator Research Institute on Global Commons and Climate Change) 
Friedrichsen, Jana (HU Berlin, FU Berlin, WZB Berlin and DIW Berlin)
Süer, Müge (HU Berlin)
Abstract:
During the COVID-19 pandemic, the introduction of mandatory face mask usage triggered a heated debate. A major point of controversy is whether community use of masks creates a false sense of security that would diminish physical distancing, counteracting any potential direct benefit from masking. We conducted a randomized field experiment in Berlin, Germany, to investigate how masks affect distancing and whether the mask effect interacts with the introduction of an indoor mask mandate. Joining waiting lines in front of stores, we measured distances kept from the experimenter in two treatment conditions – the experimenter wore a mask in one and no face covering in the other – in two time spans – before and after mask use becoming mandatory in stores. We find no evidence that mandatory masking has a negative effect on distance kept toward a masked person. To the contrary, masks significantly increase distancing and the effect does not differ between the two periods. However, we show that after the mandate distances are shorter in locations where more non-essential stores, which were closed before the mandate, had reopened. We argue that the relaxations in general restrictions that coincided with the mask mandate led individuals to reduce other precautions, like keeping a safe distance.
Keywords:
COVID-19; face masks; social distancing; risk compensation; field experiment; health policy
JEL-Classification:
I12; D9; C93
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Discussion Paper No. 299
November 15, 2021

Expectation Management of Policy Leaders: Evidence from COVID-19

Authors:
Haan, Peter (FU Berlin and DIW Berlin)
Peichl, Andreas (LMU Munich and ifo Institute)
Schrenker, Annekatrin (FU Berlin and DIW Berlin)
Weizsäcker, Georg (HU Berlin)
Winter, Joachim (LMU Munich)
Abstract:
This paper studies how the communication of political leaders affects the expectation formation of the public. Specifically, we examine the expectation management of the German government regarding COVID-19-related regulatory measures during the early phase of the pandemic. We elicit beliefs about the duration of these restrictions via a high-frequency survey of individuals, accompanied by an additional survey of firms. To quantify the success of policy communication, we use a regression discontinuity design and study how beliefs about the duration of the regulatory measures changed in response to three nationally televised press conferences by Chancellor Angela Merkel and the Prime Ministers of the German federal states. We find that the announcements of Angela Merkel and her colleagues significantly prolonged the expected duration of restrictions, with effects being strongest for individuals with higher ex-ante optimism.
Keywords:
expectations; belief updating; covid-19; shutdown
JEL-Classification:
D12; D84; H12
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Discussion Paper No. 298
November 15, 2021

Social Mobility in Germany

Authors:
Dodin, Majed (University of Mannheim)
Findeisen, Sebastian (University of Konstanz)
Henkel, Lukas (European Central Bank)
Sachs, Dominik (LMU Munich)
Schüle, Paul (LMU Munich and ifo Institute)
Abstract:
We characterize intergenerational mobility in Germany using census data on educational attainment and parental income for 526,000 children. Our measure of educational attainment is the A-Level degree, a requirement for access to university. A 10 percentile increase in the parental income rank is associated with a 5.2 percentage point increase in the A-Level share. This parental income gradient has not changed for the birth cohorts of 1980-1996, despite a large-scale policy of expanding upper secondary education. At the regional level, there exists substantial variation in mobility estimates. Place effects, rather than sorting of households, account for most of these differences.
Keywords:
intergenerational mobility; educational attainment; local labor markets
JEL-Classification:
I24; J62; R23
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Discussion Paper No. 297
November 15, 2021

Fostering the Diffusion of General Purpose Technologies: Evidence from the Licensing of the Transistor Patents

Authors:
Nagler, Markus (FAU Erlangen-Nuremberg, CESifo and LASER)
Schnitzer, Monika (LMU Munich, CESifo and CEPR)
Watzinger, Martin (University of Muenster, CESifo and CEPR)
Abstract:
How do licensing and technology transfer influence the spread of General Purpose Technologies? To answer this question, we analyze the diffusion of the transistor, one of the most important technologies of our time. We show that the transistor diffusion and cross-technology spillovers increased dramatically after AT&T began licensing its transistor patents along with symposia to educate follow-on inventors in 1952. Both these symposia and the licensing of the patents itself played important roles in the diffusion. A subsequent reduction in royal- ties did not lead to further increases, suggesting that licensing and technology transfer were more important than specific royalty rates.
Keywords:
JEL-Classification:
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