Discussion Paper No. 384
February 14, 2023
Scared Straight? Threat and Assimilation of Refugees in Germany
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Abstract:
This paper studies the effects of local threat on cultural and economic assimilation of refugees, exploiting plausibly exogenous variation in their allocation across German regions between 2013 and 2016. We combine novel survey data on cultural preferences and economic outcomes of refugees with corresponding information on German respondents, and construct a threat index that integrates contemporaneous and historical variables. On average, refugees assimilate both culturally and economically. However, while refugees assigned to more hostile regions converge to German culture more quickly, they do not exhibit faster economic assimilation. Our evidence suggests that refugees exert more assimilation effort in response to local threat, but that higher discrimination prevents them from integrating more quickly in more hostile regions.
Keywords:
refugees; cultural change; assimilation; identity;
JEL-Classification:
F22; J15; Z10;
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Discussion Paper No. 383
The ifo Education Survey 2014-2021
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Abstract:
The ifo Education Survey is a representative opinion survey of the German voting-age population on education topics that has been conducted annually since 2014. It covers public preferences on a wide range of education policy issues ranging from early childhood education, schools, and apprenticeships to university education and life-long learning. The dataset comprises several survey experiments that facilitate investigating the causal effects of information provision, framing, and question design on answering behavior. This paper gives an overview of the survey content and methodology, describes the data, and explains how researchers can access the dataset of over 4000 participants per wave.
Keywords:
education; policy; survey; experiment; public opinion; political economy; Germany;
JEL-Classification:
I28; D72; H52;
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Discussion Paper No. 382
Risk, Reward and Uncertainty in Buyer-Seller Transactions - The Seller's View on Combining Posted Prices and Auctions -
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Abstract:
In Buy-It-Now auctions, sellers can post a take-it-or-leave-it price offer prior to an auction. While the literature almost exclusively looks at buyers in such combined mechanisms, the current paper summarizes results from the sellers' point of view. Buy-It-Now auctions are complex mechanisms and therefore quite challenging for sellers. The paper discusses the seller's curse, a bias that sellers might fall prey to in such combined mechanisms, and how experience counterbalances this bias. Furthermore, the paper explores the role of information and bargaining power on behavior and profit prospects in Buy-It-Now auctions.
Keywords:
asymmetric information; laboratory experiment; field experiment; auction; BIN-auction; Buy-It-Now auction; BIN-price; Buy-It-Now price; combined mechanism;
JEL-Classification:
C72; C91; D44; D82; L1;
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Discussion Paper No. 381
February 8, 2023
Cognitive Ability and Perceived Disagreement in Learning
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Abstract:
Do agents believe to be agreeing more with others in the long-run? This paper designs an experiment to study how cognitive abilities affect actual and perceived disagreement in a standard sequential belief updating task with public signals. We document a persistent gap in the perception of disagreement as a function of cognitive ability. Higher cognitive ability is associated with less perceived disagreement, although the average subject underestimates the extent of actual disagreement regardless of cognitive ability. Learning about the state of the world has little effect on the evolution of perceived disagreement when controlling for cognitive ability. Providing subjects with information about their partner’s cognitive ability affects perceived disagreement only when the partner is less cognitively able.
Keywords:
cognitive ability; disagreement; learning;
JEL-Classification:
C90; D83; D89;
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Discussion Paper No. 380
Self-serving Bias in Redistribution Choices: Accounting for Beliefs and Norms
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Abstract:
People with higher-incomes tend to support less redistribution than lower-income people. This has been attributed not only to self-interest, but also to psychological mechanisms including differing beliefs about the hard work or luck underlying inequality, differing fairness views, and differing perceptions of social norms. In this study, we directly measure each of these mechanisms and compare their mediating roles in the relationship between status and redistribution. In our experiment, participants complete real-effort tasks and then are randomly assigned a high or low pay rate per correct answer to exogenously induce (dis)advantaged status. Participants are then paired and those assigned the role of dictator decide how to divide their joint earnings. We find that advantaged dictators keep more for themselves than disadvantaged dictators and report different fairness views and beliefs about task performance, but not different beliefs about social norms. Further, only fairness views play a significant mediating role between status and allocation differences, suggesting this is the primary mechanism underlying self-serving differences in support for redistribution.
Keywords:
redistribution; self-serving bias; fairness; norms; online experiments;
JEL-Classification:
C91; D63; D83;
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Discussion Paper No. 379
February 2, 2023
Trade and Regional Economic Development
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A central argument for trade liberalization is that when the `gains from trade' are shared, countries see large gains in economic development. In this paper, I empirically evaluate this argument and assess the impact of elite capture on regional development. Africa provides a unique study ground because the arbitrary placement of country borders during the colonial period partitioned hundreds of ethnic groups across borders. This partitioning is a source of variation in population heterogeneity and cross-country connectedness that is independent of economic considerations. Thus, African borders provide both a credible instrument for bilateral trade flows and enable the assignment of trade flows ---and their impacts--- to individuals. I find that while ethnic networks increase trade flows, increased trade activity decreases subnational economic development when measured by satellite data or individual wealth. I show that this counter-intuitive result comes from elite groups capturing the gains from trade, with detrimental impacts on trust and democratic progress in society.
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JEL-Classification:
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Discussion Paper No. 378
January 30, 2023
Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry
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Policy choices often entail trade-offs between workers and consumers. I assess how foreign competition changes the consumer welfare and domestic employment effects of a merger. I construct a model accounting for demand responses, endogenous product portfolios, and employment. I apply this model to the acquisition of Maytag by Whirlpool in the household appliance industry. I compare the observed acquisition to one with a foreign buyer. While a Whirlpool acquisition decreased consumer welfare by $250 million, it led to 1,300 fewer domestic jobs lost. Jobs need to be worth above $220,000 annually for domestic employment effects to offset consumer harm.
Keywords:
JEL-Classification:
F61; L13; L40;
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Discussion Paper No. 377
Confidence and College Applications: Evidence from a Randomized Intervention
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This paper investigates the role self-confidence plays in college applications. Using incentivized experiments, we measure the self-confidence of more than 2,000 students applying to colleges in France. This data reveals that the best female and low-SES students significantly underestimate their rank in the grade distribution compared to male and high-SES students. By matching our survey data with administrative data on real college applications and admissions, we show that miscalibrated confidence affects college choice on top of grades. We then estimate the impact of a randomized intervention that corrects students' under- and overconfidence by informing them of their real rank in the grade distribution. The treatment reduces the impact of under- and overconfidence for college applications, to the point where only grades but not miscalibrated confidence predict the application behavior of treated students. Providing feedback also makes the best students, who were initially underconfident, apply to more ambitious programs with stronger effects for female and low-SES students.
Keywords:
matching mechanism; confidence; information treatment; survey experiment;
JEL-Classification:
I24; J24; D91; C90;
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Discussion Paper No. 376
Improving Transparency and Verifiability in School Admissions: Theory and Experiment
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Abstract:
Students participating in centralized admissions procedures do not typically have access to the information used to determine their matched school, such as other students' preferences or school priorities. This can lead to doubts about whether their matched schools were computed correctly (the 'Verifiability Problem') or, at a deeper level, whether the promised admissions procedure was even used (the 'Transparency Problem'). In a general centralized admissions model that spans many popular applications, we show how these problems can be addressed by providing appropriate feedback to students, even without disclosing sensitive private information like other students' preferences or school priorities. In particular, we show that the Verifiability Problem can be solved by (1) publicly communicating the minimum scores required to be matched to a school ('cutoffs'); or (2) using `predictable' preference elicitation procedures that convey rich 'experiential' information. In our main result, we show that the Transparency Problem can be solved by using cutoffs and predictable procedures together. We find strong support for these solutions in a laboratory experiment, and show how they can be simply implemented for popular school admissions applications involving top trading cycles, and deferred and immediate acceptance.
Keywords:
school choice; matching; transparency; cutoffs; dynamic mechanisms; experiment;
JEL-Classification:
C78; C73; D78; D82;
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Discussion Paper No. 375
January 27, 2023
Taming Overconfident CEOs Through Stricter Financial Regulation
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Abstract:
A large body of literature finds that managerial overconfidence increases risk-taking by financial institutions. This paper shows that financial regulation can be effective at mitigating this type of risk. Exploiting regulatory changes introduced after the financial crisis as a natural experiment, I find that overconfidence-induced risk-taking decreases in financial institutions subject to stricter regulation. Following the easing of these regulations, overconfidence-induced risk-taking increases again. These findings confirm the effectiveness of financial regulation at correcting overconfident behavior, but also suggest that the impact fades away quickly once removed.
Keywords:
overconfidence; risk; regulation; financial sector;
JEL-Classification:
G28; G32; G38; G40;