Discussion Paper No. 394
May 15, 2023
Communicating Preferences to Improve Recommendations
Author:
Abstract:
I study a cheap talk model between a buyer and a seller with two goods for sale. There is two-sided (independent) private information with sequential, two-way communication. In the first stage, the buyer communicates her private preferences to the seller. In the second stage, the seller communicates the quality of the goods to the buyer. When the buyer’s preference is about which attribute common to both goods she prefers, the seller strictly benefits from the buyer communicating her preferences. Whereas when the buyer’s preference is about which good she prefers, this is never the case.
Keywords:
cheap talk; strategic communication; product recommendations;
JEL-Classification:
D82; L15;
Download:
Discussion Paper No. 393
May 9, 2023
Layoffs and Productivity at a Bangladeshi Sweater Factory
Author:
Abstract:
Conflicts between management and workers are common and can have significant impacts on productivity. Combining ethnographic, survey and administrative records from a large Bangladeshi sweater factory, we study how workers responded to management’s decision to lay off about a quarter of the workers following a period of labor unrest. Our main finding is that the mass layoff resulted in a large and persistent reduction in the productivity of surviving workers. Moreover, it is specifically the firing of peers with whom workers likely had social connections - friends - that matters. Additional evidence on defect rates suggests a deliberate shading of performance by workers in order to punish the factory’s management.
Keywords:
layoffs; productivity; morale; relational contracts;
JEL-Classification:
J50; M50; O12;
Download:
Discussion Paper No. 392
March 30, 2023
Rebate Rules in Reward-Based Crowdfunding: Introducing the Bid-Cap Rule
Author:
Abstract:
We study the efficacy of rebate rules in reward-based crowdfunding, where a project is only realized when a funding goal is met, and only those who pledge at least a reservation price receive a reward from the project. We propose and experimentally test two rebate rules against the customary all-or-nothing model. Firstly, we adapt the proportional rebate rule from threshold public good games to our reward-based setting. Secondly, we develop the novel bid-cap rule. Here, pledges must only be paid up to a cap, which is determined ex-post such that the provision point is exactly met. Theoretically, the bid-cap rule induces weakly less variance in payments compared with the proportional rebate rule. In our experiment, we find that both rebate rules induce higher pledges and increase the project realization rate in comparison to the all-or-nothing model. Further, we can confirm that the variance of payments is lower under the bid-cap rule compared with the proportional rebate rule.
Keywords:
crowdfunding; laboratory experiment; provision point mechanism; rebates;
JEL-Classification:
C72; C92; H41;
Download:
Discussion Paper No. 391
March 29, 2023
On the (Ir)Relevance of Fee Structures in Certification
Author:
Abstract:
Restrictions on certifiers’ fee structures are irrelevant for maximizing their profits and trade efficiency, and for the implementability of (monotone) distributions of rents. The irrelevance results exploit that certification schemes involve two substitutable dimensions—the fee structure and the disclosure rule—and adaptations in the disclosure dimension can mitigate restrictions on the fee dimension. While restrictions on fee structures do affect market transparency, it has no impact on economic efficiency or rent distributions.
Keywords:
certification; fee structures; disclosure rules; transparency;
JEL-Classification:
D82;
Download:
Discussion Paper No. 390
March 16, 2023
Can Grassroots Organizations Reduce Support for Right-Wing Populism via Social Media?
Author:
Abstract:
The rise of right-wing populism throughout Western democracies coincided with an increasing adoption of social media – both among supporters and opponents of right-wing populism alike. In light of these trends, we assess whether grassroots organizations are effective in combating right-wing populism via social media. We study this question using a tightly controlled online field experiment embedded in the Facebook campaign of a German grassroots organization. Leveraging geo-spatial variation in where the organization disseminated its Facebook ads targeting Germany’s leading right-wing populist party (AfD), we find that the campaign did not significantly affect the AfD’s vote share and turnout. Drawing on data from a complementary online experiment, we show that insufficient outreach on Facebook together with the absence of individual-level responses of attitudes and behavior explains why the campaign did not meaningfully shape aggregate election outcomes.
Keywords:
JEL-Classification:
Download:
Discussion Paper No. 389
February 27, 2023
“No Man is an Island”: An Empirical Study on Team Formation and Performance
Author:
Abstract:
Do self-formed teams perform better than other team structures? Using unique data from Virgo, a Nobel-prize-winning scientific organization with self-formed teams, first, I uncover new evidence on team formation and performance. Then, I develop a structural model to i) estimate which teams perform better controlling for self-formation and ii) evaluate the performance of counterfactual team structures. Regarding i), estimation results show that small teams perform better than large teams. Regarding ii), counterfactual results show that randomly formed teams perform worse than the observed self-formed teams, and teams with a more diverse membership perform better.
Keywords:
teamwork; entry game; structural estimation; knowledge production; organizational economics;
JEL-Classification:
C57; C72; L02; M50; O32;
Download:
Discussion Paper No. 388
Reciprocal Preferences in Matching Markets
Author:
Abstract:
Agents with reciprocal preferences prefer to be matched to a partner who also likes to collaborate with them. In this paper, we introduce and formalize reciprocal preferences, apply them to matching markets, and analyze the implications for mechanism design. Formally, the preferences of an agent can depend on the preferences of potential partners and there is incomplete information about the partners’ preferences. We find that there is no stable mechanism in standard two-sided markets. Observing the final allocation of the mechanism enables agents to learn about each other's preferences, leading to instability. However, in a school choice setting with one side of the market being non-strategic, modified versions of the deferred acceptance mechanism can achieve stability. These results provide insights into non-standard preferences in matching markets, and their implications for efficient information and mechanism design.
Keywords:
market design; matching; reciprocal preferences; non-standard preferences; gale-shapley deferred acceptance mechanism; incomplete information;
JEL-Classification:
C78; D47; D82; D83; D91;
Download:
Discussion Paper No. 387
Transparency and Policy Competition: Experimental Evidence from German Citizens and Politicians
Author:
Abstract:
A lack of transparency about policy performance can pose a major obstacle to welfare-enhancing policy competition across jurisdictions. In parallel surveys with German citizens and state parliamentarians, we document that both groups misperceive the performance of their state’s education system. Experimentally providing performance information polarizes citizens’ political satisfaction between high- and low-performing states and increases their demand for greater transparency of states’ educational performance. Parliamentarians’ support for the transparency policy is opportunistic: Performance information increases (decreases) policy support in high-performing (low-performing) states. We conclude that increasing the public salience of educational performance information may incentivize politicians to implement welfare-enhancing reforms.
Keywords:
yardstick competition; beliefs; information; citizens; politicians; survey experiment;
JEL-Classification:
H11; I28; D83;
Download:
Discussion Paper No. 386
Measuring Preferences Over Intertemporal Profiles
Author:
Abstract:
Growing evidence indicates that utility over time is different from utility under risk. Hence, measuring intertemporal preferences (discounting and utility) exclusively from intertemporal choices is desirable. We develop a simple method for measuring intertemporal preferences. It is parameter-free in both discounting and utility, and allows a wider range of models to be measured than preceding methods. It is easy to implement, clear to subjects, incentive compatible, and does not require more measurements than existing methods if identical assumptions are imposed. In an experiment, we illustrate how the method can be used to test recent models with unconventional assumptions non-parametrically.
Keywords:
measuring time preferences; intertemporal profile; parameter-free;
JEL-Classification:
C91; D12; D91;
Download:
Discussion Paper No. 385
February 16, 2023
Non-Standard Errors*
Author:
Abstract:
In statistics, samples are drawn from a population in a data-generating process (DGP). Standard errors measure the uncertainty in estimates of population parameters. In science, evidence is generated to test hypotheses in an evidence-generating process (EGP). We claim that EGP variation across researchers adds uncertainty: Non-standard errors (NSEs). We study NSEs by letting 164 teams test the same hypotheses on the same data. NSEs turn out to be sizable, but smaller for better reproducible or higher rated research. Adding peer-review stages reduces NSEs. We further find that this type of uncertainty is underestimated by participants.
Keywords:
uncertainty; standard errors; reproducibility; hypotheses;
JEL-Classification:
C13; C18; C10;