Discussion Papers

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Discussion Paper No. 328
May 12, 2022

A Field Experiment on Threshold Matching of Donations

Authors:
Adena, Maja (WZB Berlin)
Huck, Steffen (WZB Berlin and UCL)
Abstract:
We study a form of threshold matching in fundraising where donations above a certain threshold are topped up with a fixed amount. We show theoretically that threshold matching can induce crowding in if appropriately personalized. In a field experiment, we explore how thresholds should be chosen depending on past donations. The optimal choice of thresholds is rather bold, approximately 75% above past donations. Additionally, we explore how thresholds should be set for new donors as a function of their personal characteristics and demonstrate the benefits of personalization as opposed to setting a general threshold that applies to all recipients of a fundraising call.
Keywords:
charitable giving; field experiments; matching donations; personalization
JEL-Classification:
C93; D64; D12
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Discussion Paper No. 327
May 5, 2022

Portfolio Liquidation Games with Self-Exciting Order Flow

Authors:
Fu, Guanxing (The Hing Kong Polytechnic University)
Horst, Ulrich (HU Berlin)
Xia, Xiaonyu (Wenzhou University)
Abstract:
We analyze novel portfolio liquidation games with self-exciting order flow. Both the N-player game and the mean-field game are considered. We assume that players' trading activities have an impact on the dynamics of future market order arrivals thereby generating an additional transient price impact. Given the strategies of her competitors each player solves a mean-field control problem. We characterize open-loop Nash equilibria in both games in terms of a novel mean-field FBSDE system with unknown terminal condition. Under a weak interaction condition we prove that the FBSDE systems have unique solutions. Using a novel sufficient maximum principle that does not require convexity of the cost function we finally prove that the solution of the FBSDE systems do indeed provide open-loop Nash equilibria.
Keywords:
stochastic games; mean-field games; portfolio liquidation; Hawkes process; singular terminal value
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Discussion Paper No. 326
May 5, 2022

Voluntary ‘Donations’ versus Reward-Oriented ‘Contributions’: Two Experiments on Framing in Funding Mechanisms

Authors:
Adena, Maja (WZB Berlin)
Huck, Steffen (WZB Berlin and UCL)
Abstract:
In an artefactual field experiment, we implemented a crowdfunding campaign for an institute's summer party and compared donation and contribution framings. We found that the use of the word 'donation' generated higher revenue than the use of 'contribution'. While the individuals receiving the donation framing gave substantially larger amounts, those receiving the contribution framing responded more strongly to reward thresholds and suggestions. An additional survey experiment on MTurk indicated that the term 'donation' triggers more positive emotional responses and that emotions are highly correlated with giving. It appears that making a donation is perceived as a more voluntary act and is thus more successful at generating warm glow than making a contribution. We surmise that this extends to other funding mechanisms.
Keywords:
crowdfunding; field experiment; framing
JEL-Classification:
C93; D64; D12
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Discussion Paper No. 325
April 25, 2022

Explicit and Implicit Belief-Based Gender Discrimination: A Hiring Experiment

Authors:
Barron, Kai (WZB Berlin)
Ditlmann, Ruth (Hertie School Berlin)
Gehrig, Stefan (WZB Berlin)
Schweighofer-Kodritsch, Sebastian (HU Berlin)
Abstract:
Understanding discrimination is key for designing policy interventions that promote equality in society. Economists have studied the topic intensively, typically taxonomizing discrimination as either taste-based or (accurate) statistical discrimination. To reveal the limitations of this taxonomy and enrich it psychologically, we design a hiring experiment that rules out (by design) both of these sources of discrimination with respect to gender. Yet, we still detect substantial discrimination against women. We provide evidence of two forms of discrimination, explicit and implicit belief-based discrimination. Both rely on statistically inaccurate beliefs but differ in how clearly they reveal that the choice was based on gender. Our analysis highlights the central role played by contextual features of the choice setting in determining whether and how discrimination will manifest. We conclude by discussing how policy makers may design effective regulation to address the specific forms of discrimination identified in our experiment.
Keywords:
discrimination; hiring decisions; gender; beliefs; experiment
JEL-Classification:
D90; J71; D83
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Discussion Paper No. 324
April 19, 2022

Collective Brand Reputation

Authors:
Nocke, Volker (Mannheim University)
Strausz, Roland (HU Berlin)
Abstract:
We develop a theory of collective brand reputation for markets in which product quality is jointly determined by local and global players. In a repeated game of imperfect public monitoring, we model collective branding as an aggregation of quality signals generated in different markets. Such aggregation yields a beneficial informativeness effect for incentivizing the global player. It however also induces harmful free-riding by local, market-specific players. The resulting tradeoff yields a theory of optimal brand size and revenue sharing that applies to platform markets, franchising, licensing, umbrella branding, and firms with team production.
Keywords:
collective branding; reputation; free-riding; repeated games; imperfect monitoring
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Discussion Paper No. 323
April 13, 2022

Inattention and the Taxation Bias

Authors:
Boccanfuso, Jérémy (University of Bologna)
Ferey, Antoine (LMU Munich)
Abstract:
This paper shows that agent inattention to taxes generates a time-inconsistency problem in the choice of tax policy. In equilibrium, inattention leads to inefficiently high tax rates and a taxation bias emerges. Combining structural and sufficient statistics approaches, we quantify the magnitude and the welfare effects of this policy distortion for US income tax rates, and find that the taxation bias is large, alters the progressivity of income taxes, and significantly reduces social welfare. Overall, our findings shed new light on the policy and welfare implications of inattention and misperceptions.
Keywords:
inattention; misperceptions; optimal taxation; policy distortions
JEL-Classification:
D03; H21
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Discussion Paper No. 322
March 23, 2022

Microfinance Loan Officers Before and During Covid-19: Evidence from India

Authors:
Czura, Kristina (University of Groningen)
Englmaier, Florian (LMU Munich)
Ho, Hoa (LMU Munich)
Spantig, Lisa (RWTH Aachen University and University of Essex)
Abstract:
The Microfinance industry has been severely affected by Covid-19. We provide detailed insights into how loan officers, the key personnel linking the lender to its borrowers, are affected in their performance and adapt their work to the pandemic. We use administrative records of an Indian Microfinance Institution and detailed panel survey data on performance, performed tasks, and work organization to document how the work environment became more challenging during the pandemic. Loan officers operate in a setting where work from home is hard to implement due to the nature of the tasks and technological constraints. The usual performance indicators appear to be mainly driven by external factors such as the nation-wide debt moratorium. Loan officers worked similar hours, but engaged less in planning activities and completed fewer of the usual tasks. Work perceptions and mental health of loan officers reflect these changes, and perceived stress was particularly high during the period of the debt moratorium.
Keywords:
microfinance; loan officers; covid-19; work organization; India
JEL-Classification:
J22; M54; G21
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Discussion Paper No. 321
March 2, 2022

Inequality and Income Dynamics in Germany

Authors:
Drechsel-Grau, Moritz (University of Zurich)
Peichl, Andreas (ifo Institute and LMU Munich)
Schmieder, Johannes (Boston University)
Schmid, Kai D. (Heilbronn University of Applied Sciences)
Walz, Hannes (FAU and IAB)
Wolter, Stefanie (IAB)
Abstract:
We provide a comprehensive analysis of income inequality and income dynamics for Germany over the last two decades. Combining personal income tax and social security data allows us – for the first time – to offer a complete picture of the distribution of annual earnings in Germany. We find that cross-sectional inequality rose until 2009 for men and women. After the Great Recession inequality continued to rise at a slower rate for men and fell slightly for women due to compression at the lower tail. We further document substantial gender differences in average earnings and inequality over the life-cycle. While for men earnings rise and inequality falls as they grow older, many women reduce working hours when starting a family such that average earnings fall and inequality increases. Men’s earnings changes are on average smaller than women’s but are substantially more affected by the business cycle. During the Great Recession, men’s earnings losses become magnified and gains are attenuated. Apart from recession years, earnings changes are significantly right-skewed reflecting the good overall state of the German labor market and increasing labor supply. In the second part of the paper, we study the distribution of total income including incomes of self-employed, business owners, and landlords. We find that total inequality increased significantly more than earnings inequality. Regarding income dynamics, entrepreneurs’ income changes are more dispersed, less skewed, less leptokurtic and less dependent on average past income than workers’ income changes. Finally, we find that top income earners have become less likely to fall out of the top 1 and 0.1 percent.
Keywords:
inequality; income dynamics; mobility; non-labor income
JEL-Classification:
D31; E24; E31; J31
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Discussion Paper No. 320
February 24, 2022

Social Media and Mental Health

Authors:
Braghieri, Luca (LMU Munich)
Levy, Ro'ee (MIT)
Makanin, Alexey (EIEF and CEPR)
Abstract:
The diffusion of social media coincided with a worsening of mental health conditions among adolescents and young adults in the United States, giving rise to speculation that social media might be detrimental to mental health. In this paper, we provide the first quasi-experimental estimates of the impact of social media on mental health by leveraging a unique natural experiment: the staggered introduction of Facebook across U.S. colleges. Our analysis couples data on student mental health around the years of Facebook’s expansion with a generalized difference-in-differences empirical strategy. We find that the roll-out of Facebook at a college increased symptoms of poor mental health, especially depression, and led to increased utilization of mental healthcare services. We also find that, according to the students’ reports, the decline in mental health translated into worse academic performance. Additional evidence on mechanisms suggests the results are due to Facebook fostering unfavorable social comparisons.
JEL-Classification:
D12; D72; D90; I10; L82; L86
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Discussion Paper No. 319
February 18, 2022

COVID-19 and Pro-Sociality: How Do Donors Respond to Local Pandemic Severity, Increased Salience, and Media Coverage?

Authors:
Adena, Maja (WZB Berlin)
Harke, Julian (WZB Berlin)
Abstract:
Has the COVID-19 pandemic affected pro-sociality among individuals? After the onset of the pandemic, many charitable appeals were updated to include a reference to COVID-19. Did donors increase their giving in response to such changes? In order to answer these questions, we conducted a real-donation online experiment with more than 4,200 participants from 149 local areas in England and over 21 weeks. First, we varied the fundraising appeal to either include or exclude a reference to COVID-19. We found that including the reference to COVID-19 in the appeal increased donations. Second, in a natural experiment-like approach, we studied how the relative local severity of the pandemic and media coverage about local COVID-19 severity affected giving in our experiment. We found that both higher local severity and more related articles increased giving of participants in the respective areas. This holds for different specifications, including specifications with location fixed effects, time fixed effects, a broad set of individual characteristics to account for a potentially changing composition of the sample over time and to account for health- and work-related experiences with and expectations regarding the pandemic. While negative experiences with COVID-19 correlate negatively with giving, both approaches led us to conclude that the pure effect of increased salience of the pandemic on pro-sociality is positive. Despite the shift in public attention toward the domestic fight against the pandemic and away from developing countries’ challenges, we found that preferences did not shift toward giving more to a national project and less to developing countries.
Keywords:
COVID-19; charitable giving; online experiments; natural experiments
JEL-Classification:
C93; D64; D12
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